Article Summary
Moody’s, a credit-rating firm, downgraded the United States’ credit rating from AAA to AA1 for the first time since 1917 due to concerns about the country’s ability to pay its rising debt. This decision follows S&P and Fitch Ratings’ downgrades in 2011 and 2023, respectively. Moody’s expects federal deficits to reach nearly 9% of the U.S. economy by 2035. Treasury Secretary Scott Bessent stated that the government aims to grow the U.S. economy faster than the national debt to address the deficit.
What This Means for You
- Be aware of the potential impact on federal finances and interest rates following Moody’s downgrade.
- Monitor your investments and consider seeking advice from financial professionals to navigate potential consequences.
- Stay informed of future legislative actions, such as the House budget bill, that may affect the U.S. credit rating.
- Prepare for a possible increase in borrowing costs due to potential lower investor confidence in U.S. creditworthiness.
Original Post
The Moody’s credit-rating firm downgraded the United States’ rating for the first time since 1917, changing the perfect AAA rating for the government to AA1. Moody’s cited concerns about the country’s ability to pay its rising debt. The Associated Press reported this development and previous downgrades by S&P in 2011 and Fitch Ratings in 2023.
According to Moody’s, federal deficits are expected to reach nearly 9% of the U.S. economy by 2035, up from 6.4% in 2024. The United States isn’t generating enough revenue to outpace increased interest payments on debt and rising spending on entitlement programs.
Treasury Secretary Scott Bessent stated that the government is addressing the deficit by working to grow the U.S. economy faster than the national debt.
Moody’s also highlighted concerns about the current House budget bill, which extends President Trump’s 2017 tax cuts. Passage of the budget would add $4 trillion to the federal deficit over the next decade, the firm said.
Moody’s made a negative comment on the government’s credit in November 2023.
Read more: Explore my report on the advancement of the house budget committee’s bill on Sunday.
Key Terms
- Credit Rating
- Moody’s
- U.S. Federal Deficit
- National Debt
- House Budget Bill
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