Mon May 26 02:50:00 UTC 2025: **News Article:**
**Moody’s Downgrades US Credit Rating Amid Fiscal Concerns**
**Washington D.C.** – In a move that has sent ripples through financial markets, Moody’s has downgraded the United States’ credit rating from Aaa to Aa1, citing concerns over the nation’s ballooning $36 trillion debt and widening budget deficit. This marks the first time Moody’s has lowered Washington’s credit score since 1949.
The downgrade reflects anxieties about rising debt and interest costs, which Moody’s says are “significantly higher than similarly rated sovereigns.” This follows a similar downgrade by Fitch in 2023, leaving the US without a AAA rating from two of the three major credit rating agencies. Standard & Poor’s stripped the US of its AAA rating in 2011.
The rating agency highlighted the failure of successive administrations and Congress to address the growing fiscal imbalance, noting that federal debt has risen sharply over the past decade due to continuous deficits, increased spending, and tax cuts. Moody’s projects the US federal deficit to widen to 9% of GDP by 2035, with the federal debt burden reaching 134% of GDP.
The downgrade has sparked debate over the future of US fiscal policy. President Trump’s attempts to balance the budget have so far fallen short, and the administration’s efforts to cut taxes could further exacerbate the debt problem. The US government’s high debt levels are already diverting a significant portion of tax revenues to cover interest payments.
The White House has dismissed Moody’s downgrade as politically motivated, but experts warn that the downgrade could lead to higher borrowing costs for the government, companies, and consumers. Benchmark 10-year yields rose to more than 4.5% following the announcement, potentially impacting mortgage rates and other borrowing costs.
While Moody’s acknowledges the US still possesses “exceptional credit strengths,” including its size, resilience, and the dollar’s role as a global reserve currency, the downgrade serves as a stark warning about the long-term sustainability of US fiscal policy. The move also highlights the challenges facing lawmakers as they grapple with extending tax cuts introduced in 2017, a move that could further increase the national debt.
First Piper 