Budget

Fitch drops US credit downgrade threat

The United States is no longer in danger of a credit downgrade from one top rating agency.

Fitch Ratings announced Friday that it was removing its “negative” outlook to the nation’s top AAA rating, and it now views that rating as “stable” as policymakers have regained the rater’s confidence.

{mosads}The main reason for the optimistic move was the prompt and drama-free boost to the nation’s borrowing cap earlier this year. Fitch said the “timely manner” of the boost “avoided casting uncertainty over the full faith and credit of the U.S., in contrast to the crises in August 2011 and October 2013.”

It was after that first debt limit standoff that Standard & Poor’s issued the first-ever downgrade to the nation’s credit rating. And Fitch last year placed the U.S. on a negative outlook for a downgrade amid the government shutdown and another debt limit battle, citing “political brinksmanship.”

Both S&P and Moody’s also have the U.S. on a stable outlook, so Fitch’s change means all major raters say the U.S. is in no danger of a downgrade for the foreseeable future.

In February, Congress agreed to suspend the nation’s borrowing cap until nearly a year from now, and without added conditions.

The move, which was made with time to spare before a damaging default, was seen by many as a crucial shift in how the U.S. approaches fiscal issues, as GOP lawmakers abandoned their long-held stance that no boost to the borrowing cap can come without some form of concession from Democrats.

Fitch also cited the recent budget agreement and spending package enacted by Washington as providing “coherence of economic policymaking.” The rater noted that the federal budget deficit has fallen significantly as Washington cut back and the economy grew.