The United States has lost its final top-tier credit rating, as Moody’s downgraded the country from Aaa to Aa1 on Friday, citing rising debt levels and widening deficits. The move is a significant setback for President Donald Trump, landing just as his $5 trillion spending bill failed to pass a key congressional vote amid internal GOP opposition.
Moody’s warned that U.S. federal deficits could hit 9% of GDP by 2035, driven by mounting interest payments, growing entitlement costs, and weak revenue growth. The agency expects the national debt to soar to 134% of GDP, up from 98% in 2024.
The downgrade aligns Moody’s with S&P and Fitch, both of which previously stripped the U.S. of its AAA status. Moody’s noted a decade-long failure by successive administrations and Congress to curb rising fiscal deficits, and expressed skepticism that current proposals would lead to meaningful reform.
The White House pushed back, with communications director Steven Cheung criticizing Moody’s economist Mark Zandi, calling his assessments unreliable.
Despite the downgrade, Moody’s shifted the outlook from “negative” to “stable”, citing the US economy’s size, resilience, and the enduring strength of the U.S. dollar as global reserve currency.
The downgrade has sparked political debate, with Republicans urging fiscal discipline, while Democrats warned of worsening consequences from partisan gridlock. (Inputs from AFP)
