Many of you have heard this morning that Fitch has downgraded the US debt. Fitch is like FICO, but they are less objective (and maybe even political). It’s one of these things that I feel like is quite obvious. What took them so long?
I don’t take this lightly, because the last thing we want to think about is the US defaulting on their debt or really going down. It would be catastrophic if that happened!
Taking a Look at the Numbers
I read through different articles and learned as much as I could about the actual Fitch release. When you look at it, the thing that stood out to me is how it talked about an “erosion of governance.” Of course, we have terrible leadership who don’t care about the budget – they are spending wildly. So, I went and found a breakdown of the numbers that came straight from the congressional budget office.
As you can see on the video, it shows revenues vs. outlays from our government over the years. I put the last 4 in the example. Keep in mind that you have to multiply these numbers by 1 billion – add 9 zeros to get to the actual figure.
You can see the deficits that we are running. Ok, we can agree that 2020 and 2021 were anomaly years, so let’s throw those out. 2019, we were off by a trillion dollars… which was during the so-called “best economy we’ve ever seen.” Now in 2022, we were almost 1.4 trillion dollars running in a deficit.
It’s No Surprise the US Rating Was Downgraded
Looking at these numbers: it’s no surprise that Fitch would choose to downgrade. It’s clear that our deficit is getting larger and larger. No one in governance is paying any attention or even talking about balancing the budget. It’s laughable! Everyone is just into their special interests.
Until they fix this mindset and take it seriously, does the US deserve to have this downgraded rating? Of course, it’s a matter of opinion. I’m in the credit business. If I see a person with a track-record like this, then we are not excited about lending them money.
I wanted to point out the obvious here. I don’t think you need to be a math expert to understand why the credit rating changed.
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