How Fitch's US Debt Downgrade Impacts Municipal Bonds

The video discusses the economic conditions faced by state and local municipalities, highlighting the impact of Fitch's downgrade of the federal government's AAA rating. Arlene Bohner from Fitch Ratings explains the separation between sovereign and public finance ratings, noting that most local ratings remain unaffected. The municipal market showed resilience during the pandemic, but financial conditions may weaken as stimulus effects fade. States are adopting conservative budgeting and tax policy adjustments in anticipation of a potential recession in 2024.

What are the expectations for state and local governments in terms of budgeting for a potential recession in 2024?

What measures have some states taken in response to their large surpluses?