"The uncertainty over tax and spending policies associated with the so-called 'fiscal cliff' weighs on the near-term economic outlook," Fitch said in a statement. A negative outlook gives Fitch 12 to 18 months by which it is expected to make a decision on the US sovereign credit, pushing a decision well beyond the next presidential and congressional election cycle. "Absent material adverse shocks, Fitch does not expect to resolve the Negative Outlook until late 2013," Fitch said.
Nearly a year ago, rival credit rating agency Standard & Poor's made an historic cut to the US rating, dropping it by one notch to AA-plus. Moody's Investors Service holds the US rating at Aaa. All three agencies have negative outlooks with decisions by S&P and Moody's not expected until at least 2013.
Additional risks to the US credit outlook, Fitch said, emanate from the uncertain US fiscal policy as well as Europe's debt crisis and recession. It also highlighted the diminished capacity of US fiscal and monetary stimulus, referring to the near zero interest rate policy instituted by the US Federal Reserve that is expected to remain in place through late 2014.