Fitch Ratings published a report Thursday identifying the widening U.S. deficit and growing debt load as the primary threat to its U.S. sovereign credit rating, which currently stands at AA+.
The agency noted that the U.S. debt burden already exceeds that of other AA-rated nations, highlighting how far the country's fiscal position has drifted from its peers. Fitch expects conditions to worsen further this year, citing tax cuts in the One Big Beautiful Bill Act as a key driver, even after accounting for tariff revenue, and projects a general government deficit of 7.9% of GDP for both 2026 and 2027.
The U.S. carries a general debt-to-GDP ratio of 116%, more than double the roughly 55% ratio typical of comparably rated countries. Debt held by the public crossed 100% of GDP last week, a threshold not breached outside of the Covid-19 pandemic since World War II.
If U.S. debt levels continue to increase, it may push Treasury yields upwards as investors demand a higher return to hold debt from a nation with an uncertain fiscal future. Higher yields mean higher borrowing costs for the government, creating a self-reinforcing cycle where rising debt leads to rising interest payments, which leads to even more debt.
Sources: Committee for a Responsible Federal Budget, Fitch Ratings, Wall Street Journal
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