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While Establishment Media lapdogs ran around last week celebrating 2.4% U.S. Q2 GDP, Hedgeye’s Keith McCullough and Josh Steiner highlighted the big increase in Government spending which led to that GDP number and sounded the alarm on the $47 billion (conservative estimate) of debt accumulating in the background.

Fitch Ratings took notice yesterday, downgrading the U.S. credit rating due to “expected fiscal deterioration over the next three years.”

Cue America’s current Treasury Secretary and former Fed Chairwoman…

“Janet Yellen said the downgrade is not based on anything recent,” McCullough explains in this clip from The Macro Show. “That is unequivocal, categorical and mathematical bullsh*t. What actually happened is what we’ve been talking about for weeks now: the $47 trillion U.S. debt bomb. That’s all happening.”

The government spent at an accelerating rate in Q2 2023 in hopes of warding off concerns of a recession, and Yellen reached for another $1.85 trillion in the second half of the year to try to keep the charade going.

“This whole thing has to do with a bet Joe Biden and Yellen made gambling that nobody would call them out on it,” McCullough adds. “Fitch called them out on it, downgrades them, the government loses the gamble and now they have to spend the rest of their time before the next election lying about deficits and debt, which is a joke.”

Josh Steiner added his thoughts on The Call @ Hedgeye: “Fitch is giving us a little bit of a reminder these things exist, and so long as nobody in Washington is willing to do anything about these bigger longer-term problems, then yeah, we are on a glide path toward real issues.”

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