Fitch Ratings reports rising negative outlook for US credit environment in H2 2024

(MENAFN) On Wednesday, Fitch Ratings reported a rising negative outlook for the US credit environment in the latter half of this year. While most ratings across various sectors remain stable, there has been a noticeable increase in negative outlooks over the past four quarters, reflecting the pressures of high costs and interest rates on borrowers. The gap between positive and negative outlooks has narrowed, with 7.2 percent of ratings currently carrying a positive outlook compared to 5.1 percent with a negative outlook.

The report noted that consumer spending growth remains resilient but is expected to moderate as wage and job growth slow. Housing demand is still robust but has recently softened due to persistently high home prices, though affordability may improve with decreasing rates. Fitch highlighted that delinquencies and defaults are anticipated to rise for rate-sensitive borrowers in the second half of the year, with higher commercial mortgage-backed securities delinquencies projected across major commercial real estate sectors due to increased maturity defaults from high interest rates.

Fitch also forecasted that the Federal Reserve will implement two interest rate cuts this year, one in September and another in December. Despite the challenging credit environment, the agency expects a "soft landing" for the economy, with moderating inflation and low unemployment. Fitch projected annual economic growth of 2.1 percent for 2024, a slight decrease from 2.5 percent in 2023.

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