Fitch: US Budget Deficit to Reach $2 Trillion in 2026, Debt-to-GDP Ratio to Hit 129% by 2030

In its statement on the US fiscal outlook, Fitch reported that the federal government budget deficit will reach approximately $2 trillion in fiscal year 2026, with the ratio to GDP rising to 6.1 percent.

The organization expects the general government budget deficit as a percentage of GDP to rise to 7.5 percent in 2026 and 7.6 percent in 2027. It was emphasized that these ratios would represent the highest level among countries in the AA credit rating category. Should current policies continue, the ratio of general government debt to GDP is projected to reach 123 percent by the end of 2028 and 129 percent by 2030.

Fitch, which disclosed that as of October 26 the US debt subject to the debt ceiling stood at $40.93 trillion, noted that this amount remains $773 billion below the current limit. It warned that the debt ceiling could be reached in the first quarter of 2027.

Fitch also stated that if either or both chambers of Congress come under Democratic control following the upcoming midterm elections, budget negotiations could become more difficult and the risk of government shutdown could increase. The temporary budget expires on December 11.

Recalling that the Fed unanimously decided to raise interest rates in September for the first time in three years, Fitch updated its policy rate forecast to 4.25 percent throughout 2027. The statement also noted growing questions about whether artificial intelligence investments may have gone too far.