Treasury Secretary Janet Yellen said she strongly disagreed with Fitch's decision to downgrade America's perfect credit rating, saying the agency made the announcement using outdated data.
The agency cut the US from its pristine AAA rating by one level to AA+ on Tuesday. Factors included the nation's growing debt burden, expected fiscal deterioration over the next three years and “the erosion of governance”.
But the timing of the decision was questioned, after recent data showed a resilient economy. Government reports have shown continued disinflation while gross domestic product growth blew past expectations in the second quarter of this year.
“Fitch's decision is puzzling in light of the economic strength we see in the US,” Ms Yellen told reporters at an event in McLean, Virginia.
“I strongly disagree with fitch's decision and believe it is entirely unwarranted.”
Ms Yellen also remained confident that the US continues to hold the “strongest financial system in the world” as it continues to recover from the doldrums of the Covid-19 pandemic.
She also criticised Fitch's “flawed” assessment for failing to reflect on the updated improvements on the US economy, including that which related to governance.
“Despite the gridlock, we've seen both parties come together to pass legislation, to resolve the debt limit as well as make historic investments in American infrastructure and competitiveness,” she said.
Recent economic data has led to economists showing a sunnier disposition towards the economy, evidenced by new forecasts that the US is on track to avoid a recession.
“It defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world,” White House Press Secretary Karine Jean-Pierre said.
The White House said Fitch's decision was based on data from before President Joe Biden took office.
Investors use credit ratings as a benchmark for judging how risky it is to lend money to a government.
US Treasury yields changed little on Wednesday as traders weighed the decision by Fitch.
The US was put on negative credit watch by Fitch earlier this year over a debt ceiling standoff between the White House and Republican leadership.
A last-minute deal was struck to avert an economic catastrophe, but the credit agency remained wary of political divides.
“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch said.
Fitch also projects the US debt burden to balloon to 118.4 per cent of GDP by 2025. The average 'AAA' median is 39.3 per cent of GDP.
As the debt-to-GDP ratio rises, so too will the vulnerability of the US to future economic shocks, according to the rating agency.
Fitch's downgrade comes 11 years after S&P had downgraded US's perfect rating.
UAE currency: the story behind the money in your pockets
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'Dark Waters'
Directed by: Todd Haynes
Starring: Mark Ruffalo, Anne Hathaway, William Jackson Harper
Rating: ****
Nick's journey in numbers
Countries so far: 85
Flights: 149
Steps: 3.78 million
Calories: 220,000
Floors climbed: 2,000
Donations: GPB37,300
Prostate checks: 5
Blisters: 15
Bumps on the head: 2
Dog bites: 1
Company: Instabug
Founded: 2013
Based: Egypt, Cairo
Sector: IT
Employees: 100
Stage: Series A
Investors: Flat6Labs, Accel, Y Combinator and angel investors
EXPATS
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Directed: Smeep Kang
Produced: Soham Rockstar Entertainment; SKE Production
Cast: Rishi Kapoor, Jimmy Sheirgill, Sunny Singh, Omkar Kapoor, Rajesh Sharma
Rating: Two out of five stars
Heather, the Totality
Matthew Weiner,
Canongate
What sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
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The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
More on Quran memorisation:
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Brief scores:
Toss: Sindhis, elected to field first
Kerala Knights 103-7 (10 ov)
Parnell 59 not out; Tambe 5-15
Sindhis 104-1 (7.4 ov)
Watson 50 not out, Devcich 49
Killing of Qassem Suleimani
