The US credit rating seems to have been relatively unaffected by the high US debt level of $21 trillion. Credit rating agencies such as Moody’s and Fitch believe the US had sufficient resources to maintain a high credit rating. This is irrespective of the trillions of dollars of IOUs the country has standing against it.
Even though the US debt bill is steadily rising, it still maintains a high credit rating. The reason given for this by Moody is the position the US holds in the global financial system. According to Moody analysts, The US dollar and US Treasury Bonds play too significant a role in world markets for any debt to significantly affect the country’s credit rating.
US Debt Level Hits $21.06 Trillion
As of Tuesday, the total US public debt had increased by 2.8% since January to a total of $21.06 trillion. $15.34 trillion of that total is owed by the American public. While some might not be too worried about this huge and rising debt, rating agencies see to believe that the country can handle this level of debt.
Jerome Powell States US Debt Unsustainable
Not so Federal Reserve Chairman Jerome Powell. He has repeatedly iterated that the US debt is on an unsustainable fiscal path. And it seems as if at least one of the credit agencies is giving the matter some thought. Charles Seville, a senior Fitch Rating director, stated in a written report earlier in April that “Fitch considers debt tolerance to be higher than that of other sovereigns.” He also stated that outlook for US public finances had deteriorated since the last review.
US Credit Rating Remains Unchanged
His agency made the point that the total debt to GDP could conceivably hit 129% within 10 years. Such a large deficit may significantly weaken public finances. Weaken them so much so that they would be unable to withstand any future downturn in the US economy. In spite of this, the US credit rating remains unchanged! Many are unsure whether or not this situation can be maintained.
