US fiscal outlook likely to remain strained regardless of midterm results: Fitch

WASHINGTON (MNTV) – The United States is expected to face mounting fiscal challenges regardless of the outcome of the upcoming midterm elections, as rising social spending obligations and interest payments threaten to further increase government debt, Fitch Ratings warned Wednesday.

In a report, the credit rating agency said a Democratic takeover of one or both chambers of Congress could raise the risk of political standoffs over raising the federal debt ceiling and approving government spending. Such confrontations could place additional strain on the country’s already substantial budget deficit.

Fitch stressed, however, that the fundamental challenges confronting US public finances are unlikely to change with the balance of power in Congress. Growing expenditure on entitlement programs and increasing debt-servicing costs will continue to weigh on the government’s fiscal position regardless of which party prevails.

Without measures to address these pressures, the country’s debt-to-gross domestic product (GDP) ratio is likely to deteriorate further, the agency said.

According to Fitch, the US federal budget deficit approached $2 trillion in fiscal 2026, representing 6.1% of GDP.

The agency projects that the general government deficit, which also incorporates the financial balances of state and local governments, will reach 7.5% of GDP in 2026 before increasing to 7.6% in 2027. State and local government balances account for approximately 1% of GDP.

If realized, the projected deficits would be the largest among sovereign issuers carrying an ‘AA’ credit rating, Fitch said.

The agency also cautioned that the budgetary agendas of both major US political parties could exacerbate fiscal pressures unless accompanied by offsetting measures to contain spending or strengthen government revenues.