Fitch Ratings affirmed the United States' long-term sovereign credit rating at "AA+" with a stable outlook on Thursday, August 13, citing the strength of the world's largest economy even as it flagged a cooling labor market, persistent inflation, and rising fiscal pressure as ongoing risks to the country's credit profile.

What's Supporting the Rating

Fitch pointed to several structural strengths underpinning the AA+ rating: the sheer size of the US economy, high per-capita income, a dynamic business environment, and what the agency called "exceptional financing flexibility" — a reference to the US dollar's status as the world's leading reserve currency and the depth of Treasury markets. The agency said the economy has shown notable resilience despite higher tariffs, government spending cuts, tighter border controls, and heightened policy uncertainty, reflecting its underlying capacity to absorb shocks.

A Clear Growth Slowdown

Even so, Fitch's outlook wasn't uniformly upbeat. The agency now projects economic growth of 1.9% for 2026-2027, down sharply from 2.8% in 2025. It specifically flagged a weakening in labor demand and a significant slowdown in job creation over the course of this year as key drivers of the deceleration — a trend that aligns with recent labor market data showing the US economy unexpectedly shed jobs in July.

Inflation Still Running Hot

On prices, Fitch expects inflation to average 3.4% in 2026, well above the Federal Reserve's 2% target, with the agency projecting inflation won't return to target until the end of 2028 — a notably more patient timeline than some Fed officials currently debating whether further rate hikes are needed. Fitch noted that tariffs have contributed to core goods inflation, though their impact has been somewhat less severe than initially expected.

The Long-Term Fiscal Warning

The report's more pointed warnings centered on fiscal sustainability. Fitch cautioned that political gridlock and government shutdowns may become more frequent and more protracted going forward, while flagging that Medicare and Social Security costs are projected to expand by nearly a full percentage point of GDP by 2032 — adding to already-high deficits, a substantial interest burden, and rising government debt levels that continue to constrain the rating. The agency noted the US has not taken meaningful action to address its underlying fiscal imbalances.

How This Fits Among the Major Rating Agencies

Fitch's affirmation follows a similar move by S&P Global Ratings earlier in the week, which also maintained its AA+ rating on the US, citing tariff revenues as a potentially important offset to fiscal strain from recent tax and spending legislation. The two agencies now stand roughly aligned in their assessment, while Moody's Investors Service downgraded the US from its top Aaa rating to Aa1 back in May 2025, also citing debt and fiscal policy concerns — meaning all three major agencies now rate the US one notch below the highest possible tier, with fiscal sustainability the common thread in each of their assessments.

Market Reaction: Old News, Muted Response

Market analysts have suggested the affirmation is unlikely to serve as a fresh catalyst for markets, since Fitch's original 2023 downgrade of the US to AA+ already priced in much of the underlying fiscal narrative reflected in Thursday's report. The reaction has been correspondingly muted, even as US stocks continue trading near record highs.

The Bigger Picture

Fitch's report captures a familiar tension in the current US economic outlook: a fundamentally resilient economy, anchored by unmatched scale and financial flexibility, layered against a slowing growth trajectory, above-target inflation, and a long-term fiscal path that the agency continues to describe as unaddressed. For Fitch's full sovereign rating report, see the Fitch Ratings website.

With growth cooling, inflation still running above target, and entitlement costs set to climb through the next decade, Thursday's rating affirmation reads less as a clean bill of health and more as a reminder that the fundamentals supporting America's credit standing are increasingly counterbalanced by risks the country has yet to meaningfully address.