US loses last triple-A credit rating as Moody's cuts over govt debt

Pedestrians travel through Washington DC's Chinatown in March 2024. Jonathan de Santos, ABS-CBN News

Agence France-Presse

<div><span class="fr-img-caption fr-fic fr-dib"><span class="fr-img-wrap"><img src="https://od2-image-api.abs-cbn.com/prod/editorImage/17474398315061747439828365.jpeg" class="fr-fic fr-dib"/><span class="fr-inner" style="text-align:left">Pedestrians travel through Washington DC&#x27;s Chinatown in March 2024. <em>Jonathan de Santos, ABS-CBN News </em></span></span></span>WASHINGTON — The United States lost its last triple-A credit rating from a major agency Friday as Moody&#x27;s announced a downgrade, citing rising levels of government debt and dealing a blow to Donald Trump&#x27;s narrative of economic strength and prosperity.</div><p>The downgrade to Aa1 from Aaa adds to the bad news for the US president, coming on the same day his flagship spending bill failed to pass a key vote in Congress due to opposition from several Republican fiscal hawks.</p><p>Explaining its decision, the ratings agency noted &quot;the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.&quot;</p><p>Moody&#x27;s warned it expects federal deficits to widen to almost nine percent of economic output by 2035, up from 6.4 percent last year, &quot;driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation.&quot;</p><div><a href="https://www.abs-cbn.com/news/business/2025/5/15/us-set-to-lose-12-5-bn-in-foreign-tourism-in-2025-industry-0727">US set to lose $12.5 bn in foreign tourism in 2025: industry<br/></a></div><p>As a result, it expects the federal debt burden to increase to about 134 percent of gross domestic product (GDP) by 2035, compared to 98 percent last year.</p><p>The White House took to X to push back, with communications director Steven Cheung calling one of the Moody report&#x27;s authors &quot;an Obama advisor and (Hillary) Clinton donor who has been a Never Trumper since 2016.&quot;</p><p>&quot;Nobody takes his &#x27;analysis&#x27; seriously. He has been proven wrong time and time again,&quot; Cheung posted.</p><div><strong>&#x27;Fiscal house is not in order&#x27;</strong></div><p>Moody&#x27;s decision to downgrade the United States from its top credit rating mirrors similar decisions from the two other major US ratings agencies, S&amp;P and Fitch.</p><p>S&amp;P was the first to cut its rating for the United States back in 2011, during Barack Obama&#x27;s first term in office, citing its concerns that a debt management plan &quot;would be necessary to stabilize the government&#x27;s medium-term debt dynamics.&quot;</p><p>Twelve years later, Fitch followed suit, warning of &quot;a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters.&quot;</p><p>Moody&#x27;s echoed its peers in its decision Friday, noting in a statement that &quot;successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.&quot;</p><div><a href="https://www.abs-cbn.com/news/world/2024/12/28/us-treasury-s-yellen-extraordinary-measures-to-avoid-us-debt-default-1226">US Treasury&#x27;s Yellen: &#x27;Extraordinary measures&#x27; to avoid US debt default<br/></a></div><p>&quot;We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration,&quot; it added, flagging that it expected larger deficits to continue over the next decade.</p><p>America&#x27;s &quot;fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns,&quot; Moody&#x27;s said.</p><p>For Republican congressman French Hill, who chairs the House Financial Services Committee, the Moody&#x27;s downgrade &quot;is a strong reminder that our nation&#x27;s fiscal house is not in order.&quot;</p><p>House Republicans &quot;are committed to taking steps to restore fiscal stability, address the structural drivers of our debt, and foster a pro-growth economic environment,&quot; he said.</p><p>The Moody&#x27;s decision comes amid a tough fight in Congress to pass Trump&#x27;s much-touted &quot;big, beautiful&quot; spending bill, which aims to revamp and renew a roughly $5 trillion extension of his 2017 tax relief, paid for at least partially through deep cuts to the Medicaid health insurance program that covers more than 70 million low-income people.</p><p>On Friday, the agency also changed its outlook from &quot;negative&quot; to &quot;stable,&quot; noting that despite the United States&#x27; poor record tackling rising government debt levels, the country &quot;retains exceptional credit strengths such as the size, resilience and dynamism of its economy and the role of the US dollar as global reserve currency.&quot;</p><div><strong>© Agence France-Presse</strong></div>

<p>The downgrade to Aa1 from Aaa adds to the bad news for the US president, coming on the same day Trump's flagship spending bill failed to pass a key vote in Congress due to opposition from several Republican fiscal hawks.</p>

The downgrade to Aa1 from Aaa adds to the bad news for the US president, coming on the same day Trump's flagship spending bill failed to pass a key vote in Congress due to opposition from several Republican fiscal hawks.

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US loses last triple-A credit rating as Moody's cuts over govt debt

Agence France-Presse

Published May 17, 2025 08:06 AM PHT

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