Fitch Warns: US Fiscal Deficit Challenges Persist, Lack of Reforms May Worsen Mid-Term Burdens

On June 19, Fitch stated that the fiscal outlook for the United States remains challenging without significant spending reforms. Fitch indicated that according to its baseline forecast, the general government fiscal deficit as a percentage of GDP will decrease from nearly 8% in 2024 to 7.1% by 2025. However, by 2026, the total government deficit is expected to rise to 7.6% of GDP.

Fitch stated: "We expect the fiscal deficit to remain high in the coming years, as we do not anticipate significant additional fiscal policy changes during the remainder of the Trump administration." The agency also noted that "meaningful mandatory benefit reforms are critical to enhancing the sustainability of public finances in the medium term," adding that the Congressional Budget Office expects rising Social Security and Medicare costs to increase the deficit by 2% over the next decade.