US Credit Rating Downgraded: Moody's Sounds Alarm on Rising Debt

Moody's Downgrades US Credit Rating Amid Rising Debt Concerns On May 17, 2025, Moody's Investors Service downgraded the United States' credit rating from Aaa to Aa1, citing the country's rising debt burden and persistent fiscal challenges. This action reflects growing concerns among credit rating agencies about the US government's ability to manage its finances effectively. The downgrade is significant because it marks the loss of the US's last remaining 'triple-A' rating. Two other major rating agencies, Standard & Poor's and Fitch Ratings, had previously lowered their assessments of the US creditworthiness. Moody's stated that the US government's debt and interest expenses are rising at an unsustainable pace, exceeding those of other countries with comparable credit ratings. The agency criticized the lack of consensus among successive US administrations and Congresses on addressing the structural fiscal deficits. 'The US government's failure to address its fiscal challenges is a serious concern', said a Moody's spokesperson. They also pointed to projections showing that federal debt will reach approximately 134% of GDP by 2035, a significant increase from 98% in the previous year. The White House issued a statement criticizing Moody's decision, with White House Communications Director Steven Cheung stating on social media that the analysis was not credible. This highlights the political sensitivities surrounding the US's fiscal situation. Despite the downgrade, Moody's revised the outlook on the US rating from 'negative' to 'stable', suggesting that the agency does not foresee a further immediate decline in the country's creditworthiness. The situation underscores the growing challenges facing the US economy, and the need for decisive action to address the nation's long-term fiscal sustainability.