Moody's downgraded the United States credit rating from Aaa to Aa1, citing increasing government debt levels and projecting widening deficits. This move challenges Donald Trump's narrative of economic strength and prosperity.
The ratings agency highlighted the rise in government debt and interest payment ratios over more than a decade, surpassing levels of similarly rated sovereigns. It warned of federal deficits expected to reach nearly nine percent of economic output by 2035, driven by rising interest payments, entitlement spending, and low revenue generation.
Moody's anticipates the federal debt burden to grow to about 134 percent of GDP by 2035, up from 98 percent last year. This downgrade aligns with previous actions by S&P and Fitch, reflecting concerns over the US government's fiscal management.
The White House pushed back against the downgrade, criticizing one of the Moody report's authors as an Obama adviser and Clinton donor. Moody's decision underscores a lack of consensus on fiscal measures to address deficits and growing interest costs, with expectations of continued large deficits in the coming years.
Republican congressman French Hill emphasized the need for fiscal stability, acknowledging the downgrade as a signal of the nation's fiscal challenges. Moody's shift from a negative to stable outlook acknowledges the US's credit strengths despite its debt issues.
Reference from News: U.S. loses last triple-A credit rating from Moody's over gov't debt