(LOOTPRESS) – On May 16, 2025, Moody’s Investors Service downgraded the United States’ credit rating from Aaa to Aa1, marking the loss of its last top-tier credit rating. This decision reflects growing concerns over the nation’s escalating federal debt, which has surpassed $36 trillion, and persistent budget deficits. The downgrade follows earlier actions by S&P Global Ratings in 2011 and Fitch Ratings in 2023, leaving the U.S. without a triple-A rating from any major credit agency.
Moody’s cited the failure of successive administrations and Congress to implement effective measures to curb large budget deficits and rising entitlement costs. The agency projects that federal deficits will grow from 6.4% of GDP in 2024 to 9% by 2035, driven by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation.
Despite the downgrade, Moody’s shifted the U.S. outlook from negative to stable, acknowledging the nation’s strong institutional framework, large and resilient economy, and the U.S. dollar’s global reserve status. However, the downgrade underscores the challenges facing U.S. fiscal policy and the potential risks to its financial credibility.
The downgrade could lead to higher borrowing costs for the U.S. government, potentially impacting consumers through increased interest rates on loans and mortgages. It also adds pressure on policymakers to address the nation’s fiscal challenges amid ongoing political divisions.
