08/02/2023 – 1:51 pm
Fitch’s downgrade of the United States’ credit rating was met with dismay by some economists. This is the case of Paul Krugman, winner of the Nobel Prize in Economics in 2008, and Larry Summers, former US Treasury Secretary, who classified the downgrade as “bizarre”.
Summers recognized the challenges on the horizon for US fiscal policy. “But the decision of a credit rating agency today [ontem]when the economy looks stronger than expected, to downgrade the United States is bizarre and inept,” he wrote in a Twitter post.
Krugman, in turn, also does not minimize fiscal issues, in the face of political groups that prevent measures to cut spending and increase taxes. However, the economist questions whether these problems, in fact, got worse in the last year. “It would be quite interesting to know how Fitch came to this strange decision,” he points out.
For Krugman, US economic prospects have improved both in the short and long term, with less risk of recession ahead.
It also calls into question the ability of credit rating agencies to establish a country’s true sovereign creditworthiness. “Do you remember when S&P downgraded the US in 2011? Neither do I,” he points out.
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