Filenews 17 May 2025
Ratings agency Moody's downgraded the United States' credit rating from the top level Aaa to Aa1, citing growing concerns about high public debt and persistent budget deficits. The decision marks the loss of the latest "triple-A" rating by the three major international firms, following previous downgrades by Fitch and S&P Global Ratings.
Moody's noted that, despite the U.S.'s significant economic advantages, they "no longer fully compensate for the decline in fiscal figures." The agency blamed political leaders and Congress for inflating deficits, which show no signs of decline. The outlook for the evaluation is now characterized as "stable".
The downgrade caused immediate reactions in the markets. The yield on the 10-year U.S. government bond rose as much as 4.49%, while the S&P 500 index fell 0.6% in subsequent trading. Some analysts warn that investors may demand higher yields to buy government bonds, which will increase the federal government's borrowing costs.
The downgrade came at a time when the U.S. budget deficit exceeds $2 trillion. dollars a year — more than 6 percent of GDP — while total debt has already exceeded the size of the economy. The high cost of servicing the debt, due to the increased interest rates, further burdens the fiscal picture.
The downgrade caused an angry reaction from the White House. Chief communications officer Steven Chang criticized Moody's chief economist Mark Zaddy, calling him "politically biased" and "systematically unreliable," citing his relationship with the Obama and Clinton administrations.
At the same time, the effort continues in Congress to approve a bill on taxes and spending, which, according to the Joint Committee on Taxation, could cost $3.8 trillion. over the next decade. Its passage faces obstacles, as hardline members of the Republican Party have objected to its fiscal impact.
The downgrade process had begun in November 2023, when Moody's downgraded the outlook for the US rating from stable to negative. Fitch had preceded it with a downgrade in August 2023, while S&P had removed the top rating as early as 2011, causing a fierce confrontation with the US Treasury at the time.
