Overview
S&P Global Ratings on Friday affirmed the United States' long-term sovereign rating at AA+ and its short-term rating at A-1+, keeping a stable outlook in place. The agency emphasized that, despite a resilient economy and robust institutional framework, the country's fiscal trajectory remains the primary weakness for its sovereign credit profile.
Macroeconomic backdrop and fiscal dynamics
S&P said solid economic growth, broad-based government revenue collection - including continued tariff income - and credible monetary policy should contribute to deficits that remain high but broadly stable over the coming years. The agency expects net general government debt to continue rising, exceeding 100% of gross domestic product by 2029, compared with an estimated 96% in 2025.
In S&P's view, general government deficits are likely to average 6.0% of GDP between 2026 and 2029, down from an estimated 6.9% in 2025, but still elevated relative to historical norms. The ratings agency forecasts annual increases in net government debt to remain below 6% of GDP over the period, driven mainly by persistent federal deficits. It also expects interest costs to stay near 11.6% of government revenues.
Legislative, revenue and political factors
The ratings agency said the fiscal outlook will hinge on several factors: the impact of the One Big Beautiful Bill Act, the strength of tariff and non-tariff revenue collection, and the pace of economic growth. While the legislation contains significant Medicaid spending cuts, higher spending for defense and border security, extensions of the 2017 tax cuts, and permanent corporate tax provisions designed to spur investment, S&P does not expect the bill by itself to materially reduce the federal deficit.
S&P added that meaningful tariff revenue generated from various trade measures should continue to support the government's fiscal position. At the same time, the agency noted that political dynamics ahead of the U.S. midterm elections could constrain the administration's ability to pursue additional tax or spending initiatives.
Growth, productivity and inflation forecasts
On growth, S&P projects real GDP to expand by 2.1% in 2026 and by 1.9% in 2027. The agency attributes part of this momentum to continued investment related to artificial intelligence and business spending encouraged by tax incentives, while stressing that long-term productivity gains from AI remain uncertain.
Turning to prices, S&P expects consumer price inflation to average 4.0% in 2026, up from 2.6% in 2025, before easing toward 1.9% by 2028. In its assessment, the Federal Reserve's cautious, data-dependent approach to monetary policy remains in place, and the Fed's long-standing record of effective crisis response continues to underpin the U.S. sovereign rating.
External position and financing flexibility
The agency highlighted the government's strong external position, noting that the U.S. dollar's dominant reserve currency status provides exceptional external liquidity and considerable flexibility in financing both fiscal and current account deficits. S&P expects the U.S. current account deficit to average 2.9% of GDP through 2029, despite elevated external debt metrics.
Rating constraints and potential triggers
S&P reiterated that the U.S. sovereign rating is constrained by persistently high debt and deficits and by limited bipartisan progress on structural fiscal imbalances. It warned that a downgrade could occur over the next two years if deficits exceed the agency's expectations because of higher spending or weaker revenues. Conversely, an upgrade would require sustained fiscal improvement that clearly reverses the upward path of government debt.
Editors' note: This report summarizes S&P Global Ratings' latest assessment of the U.S. sovereign credit profile, including projections for debt, deficits, growth and inflation, and the key variables that will influence the agency's forward view.