Yellen finds Fitch credit downgrade ‘confusing’ and ‘unjustified’.
Treasury Secretary Janet Yellen Criticizes Fitch Ratings’ Downgrade of U.S. Economy
Treasury Secretary Janet Yellen expressed her strong disagreement with Fitch Ratings’ decision to downgrade the U.S. economy to a “AA+” rating in remarks delivered on Wednesday. Fitch had announced the downgrade on Tuesday evening, citing partisan budget disputes and the growing U.S. debt as reasons for dropping the country from its previous “AAA” rating.
The Mixed Messages of Bidenomics
Yellen’s comments echoed her initial statement released on Tuesday night, where she called Fitch’s decision puzzling and unwarranted. In her prepared remarks, she emphasized the economic strength of the United States and criticized Fitch’s flawed assessment, which she believed was based on outdated data.
Yellen highlighted the improvements seen across various indicators, including governance, over the past two and a half years. She pointed out that despite political gridlock, both parties had come together to pass legislation addressing the debt limit and making significant investments in infrastructure and American competitiveness.
The Treasury Secretary also emphasized President Joe Biden’s commitment to fiscal responsibility and outlined positive economic indicators achieved under his leadership. She mentioned the historic recovery of the American economy from the pandemic downturn, the creation of over 13 million new jobs since January 2021, a low unemployment rate of 3.6 percent, and a decline in overall annual inflation for the past year. Yellen concluded by asserting that the United States remained the world’s largest, most dynamic, and most innovative economy with a robust financial system.
“At the end of the day, Fitch’s decision does not change what all of us already know,” Yellen declared. “That Treasury securities remain the world’s preeminent safe and liquid asset, and that the American economy is fundamentally strong.”
White House press secretary Karine Jean-Pierre also expressed strong disagreement with Fitch’s decision, stating that the ratings model used by Fitch had declined under President Trump and improved under President Biden. She criticized Republican officials for their extremism, which she believed posed a continued threat to the economy, including cheerleading default, undermining governance and democracy, and advocating for deficit-busting tax giveaways for the wealthy and corporations.
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