Credit rating goes to woe factor

On August 1, the rating agency Fitch dropped the U.S. government’s longterm credit rating from AAA to AA+.

Fitch said the downgrade “reflects the expected fiscal deterioration over the next two or three years, a high and growing general government debt burden, and the erosion of governance.”

The surprise is that, in light of Fitch’s concern about how the Biden administration manages the federal government, the rating agency didn’t downgrade further. Save for the detrimental effect a further downgrade would have on the markets, a bigger lowering is justified.