Moody’s Ratings has downgraded the United States government’s credit rating from its top-tier Aaa to Aa1, citing persistent fiscal deficits and growing interest costs.
The move leaves the U.S. without a top rating from any of the three major credit agencies, following Standard & Poor’s downgrade in 2011 and Fitch Ratings’ downgrade in 2023.
Moody’s decision reflects concerns over the sharp increase in federal debt, which is projected to reach 134% of GDP by 2035, up from 98% in 2024. The agency warned that successive administrations and Congress have failed to implement measures to curb large annual fiscal deficits, exacerbated by rising entitlement spending and interest payments.
“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” it said.
Since his return to the White House on January 20, Trump has said he would balance the budget, while his Treasury Secretary, Scott Bessent, has repeatedly said the current administration aims to lower U.S. government funding costs.
The downgrade could have implications for financial markets, potentially leading to higher borrowing costs for the U.S. government and consumers. Treasury bond yields rose immediately following the announcement, signaling investor concerns over the country’s fiscal trajectory.
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