- Fitch's downgrade of the US government's credit score on Tuesday has come as a shock to markets.
- The ratings agency slashed the US's credit grade from the top-tier AAA score one notch to AA+.
Fitch shocked the markets when it cut the US government's credit score Tuesday at a time when the economy appears to be in a stable state.
The ratings agency downgraded the US's long-term rating from the top-tier AAA score to AA+, meaning it believes the government is less likely to pay back its debts despite Congress lifting the debt ceiling to avoid a default.
"There has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025," Fitch said.
From top Biden administration officials to Wall Street, several market thinkers have ripped into Fitch's move, calling it "bizarre" and "ridiculous."
Here's how 8 top voices have reacted to Fitch's downgrade.
Warren Buffett, Berkshire Hathaway CEO
"Berkshire bought $10 billion in U.S. Treasurys last Monday. We bought $10 billion in Treasurys this Monday. And the only question for next Monday is whether we will buy $10 billion in 3-month or 6-month" T-bills, Buffett said in a CNBC interview.
"There are some things people shouldn't worry about," Buffett continued. "This is one."
Jamie Dimon, JPMorgan CEO
"It doesn't really matter that much. The market decides, not the rating agencies that makes these big decisions," Dimon said in a CNBC interview of who shapes borrowing costs.
"This is the most prosperous nation on the planet. It's still the most prosperous nation on the planet. It's the most secure nation on the planet. I would point out to the ratings agencies that there are a bunch of countries rated higher than us, like triple A, but they live under the American enterprise military system," Dimon said, adding "it's ridiculous," he added.
Larry Summers, former US Treasury Secretary
"The United States faces serious long-run fiscal challenges. But the decision of a credit rating agency today, as the economy looks stronger than expected, to downgrade the United States is bizarre and inept," Summers said in a post on X.
"Rating agencies follow markets, they don't lead them — especially in the case of widely followed markets. And Treasury is the most widely followed of all. Nobody sensible should change their mind about anything on the basis of Fitch's proclamation," he added.
Mohamed El-Erian, top economist and Allianz adviser
"I am very puzzled by many aspects of this announcement, as well as by the timing. I suspect I won't be the only one. The vast majority of economists and market analysts looking at this are likely to be equally perplexed by the reasons cited and the timing," El-Erian said.
Paul Krugman, Nobel economist
"OK, some more on that bizarre Fitch downgrade. The U.S. has a long run fiscal problem, because we have effective blocking coalitions against both spending cuts and tax increases. But what would make that problem seem worse this year than a year ago?" Krugman said in a string of X posts.
"It would be mildly interesting to get the inside story of how Fitch arrived at this strange decision," he added.
Robert Kiyosaki, "Rich Dad Poor Dad" author
"First shoe to drop. Fitch rating services down grades US credit rating from AAA to AA+. Brace for crash landing. Sorry for the bad news yet I have been warning for over a year the Fed, Treasury, big corp CEOs have smoking fantasy weed. Take care," the personal finance guru said.
Janet Yellen, US Treasury Secretary
"Fitch's decision is puzzling in light of the economic strength we see in the United States. I strongly disagree with Fitch's decision, and I believe it is entirely unwarranted," Yellen said.
Mark Haefele, UBS Global Wealth Management CIO
"Fitch, the credit rating agency, lowered its rating on US government bonds, citing a higher debt burden and weaker governance over the past two decades. But while this might be expected to push yields higher as investors demand a greater risk premium, we don't anticipate this response. In fact, yields should fall as inflation cools and the Fed ends its hiking cycle soon," Haefele said in a note.