Fitch downgrades U.S. Debt outlook from Stable to Negative

Fitch has revised the long-term debt rating of the United States from Stable to Negative.

That means there’s a slightly greater than 50% chance of an actual downgrade over the next two years.

The good news is that the AAA-rating is maintained for now.

Not surprisingly, the Super Committee flop is cited as a main reason for the lower outlook:

The failure of the JSCDR underlines the challenge of securing broad-based consensus on how to reduce the out-sized federal budget deficit. Agreement and implementation in 2013 of a credible medium-term deficit reduction plan that would stabilise government indebtedness in the latter half of the decade would relieve downward pressure on the U.S. sovereign ratings, though by postponing the difficult decisions on tax and spending until after forthcoming Congressional and Presidential elections, the scale and pace of required deficit reduction will consequently be greater. Conversely, failure to reach agreement in 2013 on a credible deficit reduction plan and a worsening of the economic and fiscal outlook would likely result in a downgrade of the U.S. sovereign rating.

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