Fitch Maintains US at AA+, Stable Outlook but Cuts 2026-27 Growth Forecast to 1.9%

Fitch Ratings affirmed the United States' sovereign credit rating at 'AA+' on Thursday (13th), maintaining a 'stable' outlook. The agency cited the US's large economic scale, high per capita income, and the US dollar's continued role as the world's primary reserve currency, which together provide strong financing capacity and resilience against economic shocks. Despite rising tariffs, government spending cuts, tighter border controls, and increasing policy uncertainty, the US economy continues to demonstrate resilience.

However, Fitch downgraded its assessment of US economic growth momentum, forecasting average growth of 1.9% between 2026 and 2027—significantly lower than the 2.8% projected for 2025. Fitch also noted that labor demand in the US is weakening and the pace of job creation has slowed markedly this year, indicating that while the US economy can absorb policy and external shocks, its growth momentum is gradually cooling.

Fitch's decision to maintain the rating reflects its view that the US economy's fundamentals remain strong enough to support a high sovereign credit rating. The US is one of the world's largest economies with high per capita income, and the dollar's status as an international reserve currency continues to provide the US government with broad and flexible financing sources. In January, Fitch stated that the Federal Reserve's independence is a key factor supporting the US's 'AA+' sovereign rating and said it would continue monitoring US governance, institutional checks and balances, and the Fed's ability to maintain low and stable inflation.

Nevertheless, the US fiscal situation remains a major constraint on its rating. Fitch has previously highlighted that high fiscal deficits, rising government debt, and an aging population that will drive future spending are key factors limiting the sovereign rating. In August 2025, when Fitch maintained the 'AA+' rating, it projected that the US general fiscal deficit as a share of GDP would decline from 7.7% in 2024 to 6.9% in 2025, driven by economic resilience, strong stock market performance, and higher tariff revenues. At the time, tariff revenues were expected to rise from $77 billion in 2024 to $250 billion in 2025. Fitch also projected that US debt as a share of GDP would rise from 114.5% at the end of 2024 to 127% by 2027.

As the US government continues to rely on tariff revenues, the dual impact of tariffs on fiscal health and economic growth has become a market focus. The International Monetary Fund (IMF) noted in February that US economic growth in 2025 is expected to be 2.2%, but job growth has already slowed significantly. Additionally, tax and spending policies enacted in 2025 are expected to provide a short-term boost of about 0.75 percentage points to GDP levels between 2026 and 2027, but will also increase the fiscal deficit by approximately 1.5 percentage points of GDP. The IMF also projected that the US federal deficit could exceed 6% of GDP in the coming years, with debt-to-GDP ratios continuing to rise.

In its latest Article IV consultation report on the US, the IMF further stated that employment growth from 2026 to 2027 is expected to be less than half of the pre-pandemic five-year average, primarily due to slowing labor force population growth. Meanwhile, tariff policies are expected to create a negative supply shock to the US economy, potentially reducing economic activity levels by about 0.4% by 2027. The IMF warned that under current policies, US general government debt as a share of GDP is projected to exceed 140% by 2031.

US credit ratings have undergone significant adjustments in recent years. In 2023, Fitch downgraded the US long-term sovereign rating one notch from the highest 'AAA' to 'AA+', primarily due to fiscal deterioration and repeated congressional standoffs over the debt ceiling. In May 2025, Moody's (MCO-US) also downgraded the US sovereign rating from 'Aaa' to 'Aa1', maintaining a stable outlook, leaving the US without a unanimous top 'AAA' rating from the three major international rating agencies.

On the other hand, S&P Global (SPGI-US) maintained the US 'AA+' rating and stable outlook in June, citing US economic resilience and strong fiscal revenues as supportive factors. S&P forecasts annual US economic growth of about 2% from 2026 to 2029 and believes that increased fiscal revenues, including tariff income, will help reduce the risk of fiscal失控. S&P also noted that strong institutions and checks and balances continue to support US policy operations, and AI investment may remain a key pillar of corporate investment.

Among the three major rating agencies, both Fitch and S&P maintain the US at 'AA+', while Moody's has it at 'Aa1'. The US no longer enjoys a unanimous top credit rating from all three agencies. Nonetheless, the dollar's central role in the global financial system remains a key pillar of US creditworthiness. Fitch noted in 2025 that the dollar accounts for about 58% of global foreign exchange reserves and expects the dollar's dominant position in international trade and financial markets to persist even amid policy uncertainty.

Markets will now focus on whether US fiscal deficits, government debt, tariff revenues, and labor market performance can maintain balance over the coming years. While Fitch did not change the 'AA+' rating or stable outlook, its decision to set the 2026–2027 growth forecast at 1.9% and highlight weakening labor demand and slowing job growth indicates that US sovereign credit remains supported by strong economic fundamentals and the dollar's status, but faces long-term pressures from fiscal deterioration and slowing growth.