Moody's Strips the United States of Its Last Top Credit Rating, Cutting It to Aa1 from Aaa
Moody's Ratings announced in New York on May 16, 2025, that it had downgraded the Government of the United States of America's long-term issuer and senior unsecured ratings by one notch to Aa1 from Aaa, and changed the outlook to stable from negative. Moody's was the last of the three major rating agencies still rating the United States at its highest grade; with this cut, the United States no longer holds a top rating from any of the three agencies.
Moody's said the one-notch downgrade on its 21-notch scale reflects the increase over more than a decade in government debt and interest payment ratios to levels significantly higher than similarly rated sovereigns. "Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," Moody's said. "We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration."
Over the next decade, Moody's expects larger deficits as entitlement spending rises while government revenue remains broadly flat, driving the government's debt and interest burden higher and causing U.S. fiscal performance to deteriorate relative to its own past and to other highly rated sovereigns. Moody's anticipates the federal debt burden will rise to about 134% of GDP by 2035, compared with 98% in 2024, and that the federal deficit will widen from 6.4% of GDP in 2024 to nearly 9% by 2035.
The stable outlook, Moody's said, reflects balanced risks at Aa1: the United States retains exceptional credit strengths, including the size, resilience and dynamism of its economy and the role of the U.S. dollar as the global reserve currency. Moody's also expects the United States to continue its long history of very effective monetary policy led by an independent Federal Reserve, and said the constitutional separation of powers contributes to policy effectiveness over time.
Standard & Poor's had cut the U.S. rating to AA+ in 2011 and Fitch followed with a cut to AA+ in August 2023; Moody's at that time only moved its outlook to negative, keeping the Aaa rating until now. The downgrade came as Congress was considering the president's tax-and-spending bill, which the House Budget Committee initially voted down the same day.
Treasury Secretary Scott Bessent, in an interview with NBC on May 18, called Moody's a "lagging indicator" and said the administration was working to cut spending and spur growth through deregulation. (Source: Moody's Ratings)
Source: Moody's Ratings
Published by GSM · USA (original Chinese edition)
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