The credit rating agency Fitch downgraded its US outlook from “stable” to “negative” on Friday., warning of a high risk that the debt and the deficit will increase due to the crisis caused by the new coronavirus, but retained its AAA rating. On the same day, the oil sector, affected by the drop in demand, reported sharp falls.
“The outlook has been revised to negative to reflect the current deterioration of US public finances and the absence of a credible fiscal consolidation plan“The agency said in a statement.
However, the United States kept triple A, the best rating on the scale, based on the structural strengths that include the size of its economy, high per capita income and a dynamic business environment.
The American economy has been badly affected by the pandemic, which affected employment and GDP, which in the second quarter registered an unprecedented contraction of more than 32%.
With this data, the country officially entered a recession, chaining two consecutive quarters with falls in GDP.
To prop up the economy and maintain consumption – which is the engine of growth in the United States – Congress approved several stimulus plans for households and businesses for more than $ 2.2 trillion.
Congress is currently negotiating the delivery of more help, at a time when an important subsidy of 600 dollars a week that the unemployed receive expires and the virus advances without control.
“He high fiscal deficit and debt were already growing in the medium term before the hard economic blow precipitated by the coronavirus, “the rating agency indicated.
Fitch indicated that There is an “increasing risk” that policy makers may not be able to consolidate public finances enough to “stabilize debt” after the pandemic strike passes.
In this regard, the country’s public debt was expected to reach 130% of GDP by 2021, according to Fitch.
Amid fights and partisan accusations in Congress in Washington, Millions of Americans will lose the extraordinary $ 600 weekly unemployment aid approved to tackle the coronavirus crisis, which continues to wreak havoc across much of the United States, starting next week.
The reinforcement of the unemployment aid was agreed within the tax rescue plan of the end of March for a total value of 2.2 trillion dollars, the highest in the history of the country, but which has been insufficient given the severity of the crisis.
With the Republican-controlled Senate, Already in recess this Friday for the weekend, the chances of an agreement disappeared and what remains is the traditional wave of reproaches between Republicans and Democrats.
These additional $ 600 a week had become an economic lifeline for many Americans since the arrival of the pandemic in March caused a wave of mass layoffs.
Fall in the oil sector
The companies Exxon Mobil and Chevron, giants of the US oil industry, registered Sharp declines in the second quarter of 2020 due to the drop in economic activity.
Exxon reported losses of $ 1.1 billion, the largest since the merger with Mobil in 1999, while Chevron recorded a decline of $ 8.3 billion in the same period.
“We have never seen such a dramatic drop in demand,” said Exxon senior vice president Neil Chapman.
The United States is, at the moment, the country hardest hit by the coronavirus pandemic, having registered 152,940 deaths and 4,542,620 infections.
With information from AFP and EFE
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