The three major credit rating agencies for the US are:
Moody's Investors Service
Standard & Poor's (S&P)
Fitch Ratings
These agencies are responsible for assigning credit ratings to companies, governments, and other entities. The ratings are based on a number of factors, including the entity's financial strength, its ability to repay its debt, and its overall risk profile.
The credit ratings of these agencies are used by investors, lenders, and other market participants to assess the risk of lending money to an entity. The higher the rating, the lower the risk.
The "Big Three" credit rating agencies have a combined market share of over 95%. This means that their ratings have a significant impact on the financial markets.
The US credit rating was downgraded by Fitch Ratings on August 1, 2023. The agency lowered the country's long-term credit rating from AAA to AA+, citing "political brinkmanship" and a growing debt burden. This is the second time in history that the US credit rating has been downgraded. The first time was in 2011, during the financial crisis.
The downgrade could have a number of negative consequences for the US economy, including:
Higher interest rates on government debt
Reduced investment in the US economy
Weaker economic growth
The US government has criticized the downgrade, calling it "arbitrary" and "unjustified." However, Fitch Ratings has defended its decision, saying that it is based on the "steady deterioration" in US fiscal management.
It is still too early to say what the long-term impact of the downgrade will be. However, it is a clear sign that the US government's fiscal situation is a cause for concern.
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