Fitch has downgraded the credit rating for the U.S. government from its AAA top spot rating to AA+ just months after the U.S. debt-ceiling crisis was resolved for 2023.
The AA+ rating still ranks among the highest ratings possible for Fitch Ratings.
Fitch is one of three major credit rating agencies, alongside S&P and Moody's. These agencies analyze an entity's ability to pay back debts — whether they're a company or a country.
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U.S. Treasury Secretary Janet Yellen said in a statement on Tuesday that the downgrade is an "arbitrary and based on outdated data."
In the statement, Yellen said, "I strongly disagree with Fitch Ratings' decision...Fitch’s quantitative ratings model declined markedly between 2018 and 2020 - and yet Fitch is announcing its change now, despite the progress that we see in many of the indicators that Fitch relies on for its decision."
Yellen said, "Many of these measures, including those related to governance, have shown improvement over the course of this administration, with the passage of bipartisan legislation to address the debt limit, invest in infrastructure, and make other investments in America’s competitiveness."
The ratings agency said it made the downgrade based on what it called an "erosion of governance."
The White House released a statement responding to the downgrade saying the administration "strongly" disagrees with the decision.
The White House said, "It defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world. And it’s clear that extremism by Republican officials - from cheerleading default, to undermining governance and democracy, to seeking to extend deficit-busting tax giveaways for the wealthy and corporations - is a continued threat to our economy."
Fitch originally placed the U.S. and its AAA rating on a negative watch on May 24, specifically pointing to the debt ceiling fight as a major contributing factor.
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