Moody’s Investors Service has downgraded the United States’ long-held triple-A credit rating, citing persistent concerns over the country’s growing debt burden and rising interest costs. The move marks the first time since 1917 that the 116-year-old rating agency has stripped the U.S. of its perfect credit score, lowering it from AAA to Aa1.
The decision places Moody’s in line with its major global counterparts—Fitch Ratings, which downgraded the U.S. in August 2023, and Standard & Poor’s, which made a similar move back in 2011.
In a statement issued Friday, Moody’s pointed to a “more than decade-long” trend of rising federal debt and interest payment ratios that now far exceed those of other similarly rated sovereign nations. The agency emphasized the lack of a long-term fiscal strategy from both the White House and Congress, criticizing the inability of successive administrations to curb ballooning deficits and rising debt servicing costs.
Despite the downgrade, Moody’s acknowledged the enduring strengths of the U.S. economy, citing its size, resilience, and the global dominance of the U.S. dollar as a reserve currency.
The announcement comes amid heightened fiscal uncertainty. Treasury Secretary Scott Bessent recently warned that the federal government could default as early as August unless Congress raises or suspends the debt ceiling—currently set at $36.1 trillion. The national debt has already surpassed that threshold, reaching $36.2 trillion, prompting the Treasury to implement “extraordinary measures” to keep the government solvent. These include temporary suspensions of payments into federal employee retirement funds.
Under the Biden administration, the debt ceiling was raised three times. President Donald Trump, now serving his second term, has called for the complete elimination of the borrowing cap, branding it a “meaningless” political tool that only serves as a psychological barrier.
Reacting to the downgrade, White House spokesperson Kush Desai criticized Moody’s, saying the agency had “no credibility” and had failed to sound the alarm during what he described as the “fiscal disaster” of the previous four years. Desai asserted that the Trump administration is now managing the financial instability inherited from the Biden era.
The downgrade may lead to higher borrowing costs for the U.S. government and could ripple across financial markets as investors reassess the risk associated with U.S. Treasury securities—long considered one of the safest assets globally. Economists warn that without a bipartisan fiscal strategy, further erosion of investor confidence could follow.
