Moody's Slaps U.S. with Credit Downgrade, White House Fires Back
A credit rating agency, Moody's, has downgraded the United States' credit standing from AAA to Aa1.
They've pulled the rug! Moody's Investors Service has yanked the U.S. off its top pedestal, downgrading our credit rating from a pristine "Aaa" to a still-respectable "Aa1." The agency ain't done yet, switching the outlook to a stable one – implying no immediate downgrade on the horizon.
Moody's rationale behind this move? That's easy. They reckon our fiscal situation's a hoarder's dream, expected to dip farther than ever before compared to past years and top-rated nations. The almighty economic and financial powerhouses of the U.S. may no longer be able to bail us out, they warn.
Word from the White House was less diplomatic. Steven Cheung, the communication honcho of the Oval Office, took a sharp swipe at Moody's economist Mark Zandi in a social media post. Cheung branded Zandi a political nemesis of President Trump, remarking that no one takes his analysis seriously, and he's wrong time and again.
Before the Big Three got all judgmental, Moody's was the lone sofa-cushion bearer, granting the U.S. that coveted "Triple-A Rating." Standard & Poor's stripped it back in '11, and Fitch followed suit in '23. Moody's flipped the switch from "stable" to "negative" in November '23, hinting that a downgrade could be on the horizon ASAP. Why's that matter? Lower ratings equate to higher borrowing costs for the nation.
The Economy's Got Issues Too
What about those tariffs Trump's been slapping on? Moody's states that GDP may slump temporarily as the economy absorbs the shock. But they ain't predicting a permanent blow to the economy's growth. The agency has faith in the U.S.'s enormous economic muscles, resilience, and dynamism – and the U.S. dollar's role as a global reserve currency.
Despite political uncertainty over the past months, Moody's expects the U.S. to adhere to effective monetary policies under the Fed's command. The Credit Czars don't think tariffs will foil the country's long-term growth prospects either.
Want to know the nitty-gritty behind the downgrade? Here's what Moody's feared:
- Mounting Debt and Budget Deficits: The U.S. government's been clocking in near $2 trillion in annual budget deficits, ballooning the total debt beyond the size of the economy[1][3].
- Political Stalemates: Successive U.S. administrations and Congress have been at odds about addressing these fiscal issues, leading to a persistent crisis[1][5].
- Rising Borrowing Costs: The escalating interest costs associated with the debt burden strain the fiscal outlook further[1][5].
Stay tuned for more developments on this story.
References:
[1] ntv.de
[3] mau/rts
Keywords:
- Rating Agencies
- Moody's
- USA
- Fiscal Policy
- Deficit
- Donald Trump
- The downgrade in the U.S. credit rating by Moody's Investors Service might result in increased concern about the nation's employment policies, as mounting debt and budget deficits could pose challenges to future job creation and economic stability.
- The Trump administration's focus on implementing tariffs has been criticized by Moody's, raising questions about the U.S. business and financeenvironment, politics, and general-news, as the proposed tariffs may lead to temporary economic shocks and uncertainty in the short term, potentially impacting employment policies and long-term growth prospects.
