US state budgets bracing for future uncertainties: Fitch

ANKARA

State budgets in the US are bracing for macroeconomic uncertainties ahead, according to a report released by Fitch Ratings on Monday.

The global rating agency said slower economic growth and rising inflation pose some downside risks for American states.

The individual state budgets were drawn up in light of potential economic and geopolitical headwinds, it added.

Although the US' gross domestic product grew 5.7% in 2021, Fitch said it expects economic growth to slow sharply to 2.9% in 2022, and then further slow to 1.5% in 2023 due to rapidly rising interest rates.

"States are well positioned for slower growth, as a result of generally prudent fiscal choices made over the last two fiscal years," Senior Director Karen Krop said in a statement.

Fitch said US states are providing additional funding for school districts and higher education, while allotting some of that funding to boost salaries and raise compensation packages to retain employees.