On Monday, The Gateway Pundit reported that more than five million unemployed Americans were left out from job reports released by the administration. This seems consistent with a recent chart showing the “Population With a Disability, 16 Years and over” that shows an increase of over four million Americans since the beginning of 2021.
Yesterday, Fitch Ratings downgraded the United States “Long-Term Foreign-Currency Issuer Default Rating (IDR) from AAA to AA+.
From Fitch Ratings:
FitchRatings has downgraded the United States of America’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’. The Rating Watch Negative was removed and a Stable Outlook assigned. The Country Ceiling has been affirmed at ‘AAA’.
Ratings Downgrade: The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.
The report went on to state an “Erosion in Governance” was also among contributing factors. Specifically, a “steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025.” A lack of a “medium-term fiscal framework” and “complex budgeting process” were also attributed.
Fitch also expects the general government deficit to rise to 6.3% of the GDP in 2023. It was 3.7% in 2022. This is evidence of “cyclically weaker federal revenues, new spending initiatives, and higher interest burden.” Forecasts don’t get any better: a rise of 6.6% of the GDP is expected in 2024, followed by 6.9% in 2025.
The report predicts a “mild recession” in the 4th quarter of 2023 and 1st quarter of 2024 due to “tighter credit conditions, weakening business investment, and a slowdown in consumption.”
There is some good news:
The U.S. has an ESG Relevance Score (RS) of ‘5’ for Political Stability and Rights and ‘5[+]’ for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in Fitch’s proprietary Sovereign Rating Model. The U.S. has a high WBGI ranking at 79, reflecting its well-established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption.
In other words: Rome is burning, but at least we’re ‘woke’. Build Back Better.
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