Why the US Credit Rating Was Cut and What It Means: QuickTake

Americans generally expect to be No. 1 at everything. So the downgrade of the country’s credit rating for only the second time ever rattled the country’s pride and the global financial system. The US was stripped of its top-tier sovereign credit rating by Fitch Ratings on Aug. 1, echoing a move more than a decade ago by S&P Global Ratings. Both markdowns were spurred by bitter standoffs over the nation’s borrowing. History suggests that the impact on financial markets may be short-lived, though the move could provide fodder for more political battles.

1. Why did Fitch downgrade the US?

Fitch ...