Moody's Downgrades US Credit Rating: A Century-Long First

Moody's Downgrades US Credit Rating: What Does It Mean for the American Economy? The United States faced a significant blow on May 16, 2025, when Moody's Investors Service downgraded its credit rating, citing concerns about the country's rising government debt and fiscal strength. This is the first time the US has received a credit rating downgrade from Moody's in over a century. "This is breaking news," explains Justin Moore, a former Goldman Sachs and Google employee and the author of the viral TikTok video discussing the downgrade. "The US has bad credit!" Moore's video highlights the severity of the situation and its potential impact on the economy. The downgrade reflects Moody's assessment of the US government's increasing debt burden and the challenges it faces in addressing its fiscal issues. The agency cited the ongoing political gridlock in Washington and the lack of a long-term plan to reduce the deficit as contributing factors. The downgrade is likely to have significant consequences for the US economy. It could lead to higher borrowing costs for the government, potentially impacting interest rates and inflation. It also raises questions about the country's long-term economic outlook. The timing is particularly noteworthy, given the recent focus on student loan debt collections, which have contributed to a decline in the average US credit score. While the US government has faced credit rating downgrades in the past (from Standard & Poor's in 2011 and Fitch in 2013), this downgrade from Moody's carries significant weight, given Moody's reputation as a major credit rating agency. The situation underscores the need for the US government to address its fiscal challenges and implement sustainable solutions to reduce its debt burden. The future will depend on the government's ability to navigate this economic challenge effectively.