Fitch Ratings projects US government debt will climb from 117% of GDP at the end of 2025 to 123% by the end of 2028, already more than double the median for other 'AA'-rated countries. The agency says the general government deficit is set to widen to 7.4% of GDP in 2026 and stay there in 2027, the highest among AA-rated sovereigns, driven by rising military and interest costs plus growing Medicare and Social Security spending.
Fitch expects the US to hit its $41.1 trillion statutory debt ceiling around mid-2027 and says Washington has taken no meaningful action to address the deficits. Despite all that, the agency affirmed the US long-term foreign-currency rating at AA+ with a stable outlook, citing the size of the economy and the dollar's reserve-currency status.
The agency forecasts GDP growth averaging just 1.9% in 2026 and 2027, with inflation running at 3.4% this year, above the Fed's 2% target, and labor demand already weakening. Tariffs are contributing to higher core goods inflation, though Fitch says the pass-through to consumers has been milder than expected.
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