Source: Bloomberg
Author: Enda Curran, Hannah Pedone
After the US government's credit rating is lowered, the debt problem of the world's largest economy has returned to the market conservation.
The United States has just begun to get rid of recession concerns. Last week, Fed Chairman Powell said that the Fed's internal researchers no longer expect the economy to decline, and Bank of America economists have also revoked the forecast of economic recession.More and more signs show that the situation of consumers and enterprises has remained well. The data released on Wednesday shows that US companies' new employment in July exceeded expectations.
This was in sharp contrast to the 201 2011 standard of the US AAA credit rating. At that time, the US economy had not taken out the shadow of the global financial crisis, with an unemployment rate of about 9%.Now the U.S. unemployment rate is 3.6%, the lowest level in the past 10 years.
Fitch lowered US credit rating from AAA to AA+. This decision highlights that the number of debt accumulated in the United States in recent years is quite considerable.The US government has recently launched infrastructure, technology and clean energy investment plans.In addition, as the Fed has adjusted the policy interest rate to 22 years, the cost of government debt raising has soared.
Fitch predicts that this proportion will rise to 118 % by 2025, and it will be more than three times that of the national debt ratio of 39.3 % of the country.The agency predicts that in the long run, the proportion will rise further.Analysts believe that this may make the White House have to make difficult choices.
LPL Financial chief global strategist Quincy Krosby said, "If the deficit is not controlled, the final tax may be as high as the point where consumer disposable income becomes less."
Today is not the same as before
The US budget deficit has soared to a record level. Due to the impact on the economy, the U.S. government spent great efforts to support families and enterprises.Last year's budget deficit was shrinking, but now it has begun to expand.
In the first nine months of this fiscal year, the federal deficit was US $ 1.4 trillion (S $ 1979.2 billion), which was almost three times the same period last year.The U.S. Treasury has raised the borrowing forecast of this quarter to $ 1 trillion, which is much higher than the US $ 733 billion in May.
Trus Financial Corp.'s head of the US Economic Research Department, Mike SKORDELES, said that the rating of Fitch Development also foreshadow that the US government needs to promote budget procedures to cope with autumn political duels, and the government may have stopped.In June of this year, the two -party members reluctantly reached an agreement on raising the upper limit of debt.
Over the years, the fiscal deficit of the United States has been increasing, and several presidents have made little progress on this issue. Skodeles said that the decision of Fitch is equivalent to saying that the agency believes that both politicians of the two parties lack political will to solve this matter to solve this matterEssence
Although the recent economic prospects in the United States may be improved, Fitch's rating analysts have not paid much attention to economic recession.James McCormack, a global supervisor of Fitch sovereignty and super national rating, pointed out in a response to the email that the lower -reduction rating is based on the midterm of the midterm, that is, it is expected that American deficit and government debt will rise, not based on predicting economic recession.
Many market participants agree with this view.UBS strategist said the fundamental situation caused Fitch to make decisions is much worse than that of the S & P's rating more than 10 years ago.
"The downgrade in 2011 is mainly due to the impact of the debt limit," the UBS strategist such as Michael Cloherty wrote in a report on Tuesday."This time it is due to the risk of debt limit and a very large budget deficit."
