Economic Outlook Deteriorates for a Quarter of US Sectors

In a significant midyear update, Fitch Ratings has revised the outlook to "deteriorating" for approximately 25% of US sector companies for 2025. This adjustment reflects growing economic uncertainties and a slowdown in growth projections.

Government Deficits and Debt Projections

The agency highlights concerns over US government deficits, expected to remain above 7% of GDP. Furthermore, the debt-to-GDP ratio is anticipated to climb to 135% by 2029, fueled by recent legislative actions including the tax and spending bill enacted on July 4 and the continuation of previous tax cuts.

Revised GDP Growth Forecasts

While Fitch has slightly increased its 2025 US GDP growth forecast from 1.2% to 1.5%, it warns of a potential deceleration in economic momentum as the year progresses.

Impact of Recent Tax Legislation

Adding to the fiscal concerns, the Congressional Budget Office (CBO) projects that the recent tax bill signed by President Donald Trump will swell the federal deficit by $3.4 trillion and result in 10 million more Americans losing health insurance over the next decade.