New York, NY…Moody’s Ratings (Moody’s) has downgraded the Government of United States of America’s (US) long-term issuer and senior unsecured ratings to Aa1 from Aaa and changed the outlook to stable from negative.
This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.
Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration. Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat. In turn, persistent, large fiscal deficits will drive the government’s debt and interest burden higher. The US’ fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns.
The stable outlook reflects balanced risks at Aa1. The US 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. In addition, while recent months have been characterized by a degree of policy uncertainty, we expect that the US will continue its long history of very effective monetary policy led by an independent Federal Reserve. The stable outlook also takes into account institutional features, including the constitutional separation of powers among the three branches of government that contributes to policy effectiveness over time and is relatively insensitive to events over a short period. While these institutional arrangements can be tested at times, we expect them to remain strong and resilient.
The US’ long-term local- and foreign-currency country ceilings remain at Aaa. The Aaa local-currency ceiling reflects a small government footprint in the economy and extremely low risk of currency and balance of payment crises. The foreign-currency ceiling at Aaa reflects the country’s strong policy effectiveness and an open capital account, reducing transfer and convertibility risks.
A full list of affected ratings is provided towards the end of this press release.
RATINGS RATIONALE
RATIONALE FOR THE RATINGS DOWNGRADE TO Aa1
Over more than a decade, US federal debt has risen sharply due to continuous fiscal deficits. During that time, federal spending has increased while tax cuts have reduced government revenues. As deficits and debt have grown, and interest rates have risen, interest payments on government debt have increased markedly.
Without adjustments to taxation and spending, we expect budget flexibility to remain limited, with mandatory spending, including interest expense, projected to rise to around 78% of total spending by 2035 from about 73% in 2024. If the 2017 Tax Cuts and Jobs Act is extended, which is our base case, it will add around $4 trillion to the federal fiscal primary (excluding interest payments) deficit over the next decade.
As a result, we expect federal deficits to widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024, driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation. We anticipate that the federal debt burden will rise to about 134% of GDP by 2035, compared to 98% in 2024.
Despite high demand for US Treasury assets, higher Treasury yields since 2021 have contributed to a decline in debt affordability. Federal interest payments are likely to absorb around 30% of revenue by 2035, up from about 18% in 2024 and 9% in 2021. The US general government interest burden, which takes into account federal, state and local debt, absorbed 12% of revenue in 2024, compared to 1.6% for Aaa-rated sovereigns.
While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects balanced risks at Aa1. A number of credit strengths offer resilience to shocks.
The US economy is unique among the sovereigns we rate. It combines very large scale, high average incomes, strong growth potential and a track-record of innovation that supports productivity and GDP growth. While GDP growth is likely to slow in the short term as the economy adjusts to higher tariffs, we do not expect that the US’ long-term growth will be significantly affected.
In addition, the US dollar’s status as the world’s dominant reserve currency provides significant credit support to the sovereign. The credit benefits of the dollar are wide-ranging and provide the extraordinary funding capacity that helps the government finance large annual fiscal deficits and refinance its large debt burden at moderate and relatively predictable costs. Despite reserve diversification by central banks globally over the past twenty years, we expect the US dollar to remain the dominant global reserve currency for the foreseeable future.
Underpinning the rating is our assumption that the US’ institutions and governance will not materially weaken, even if they are tested at times. In particular, we assume that the long-standing checks and balances between the three branches of government and respect for the rule of law will remain broadly unchanged. In addition, we assess that the US has capacity to adjust its fiscal trajectory, even as policy decision-making evolves from one administration to the next.
Moreover, the resilience of the US sovereign rating to shocks is supported by strong monetary and macroeconomic policy institutions. Although policy has been less predictable in recent months, relative to what has typically been the case in the US and other highly-rated sovereigns, we expect that monetary and macroeconomic policy effectiveness will remain very strong, preserving macroeconomic and financial stability through business cycles.
SUMMARY OF MINUTES FROM RATING COMMITTEE
GDP per capita (PPP basis, US$): 85,812 (2024) (also known as Per Capita Income)
Real GDP growth (% change): 2.8% (2024) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 2.9% (2024)
Gen. Gov. Financial Balance/GDP: -7.5% (2024) (also known as Fiscal Balance)
Current Account Balance/GDP: -3.9% (2024) (also known as External Balance)
External debt/GDP: 88.0% (2024)
Economic resiliency: aa1
Default history: No default events (on bonds or loans) have been recorded since 1983.
A rating committee was called to discuss the rating of the United States of America, Government of. The main points raised during the discussion were: The issuer’s economic fundamentals, including its economic strength, have not materially changed. The issuer’s institutions and governance strength, have not materially changed. The issuer’s fiscal or financial strength, including its debt profile, has materially decreased. The issuer’s susceptibility to event risks has not materially changed.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The implementation of fiscal reforms to significantly slow and eventually reverse the deterioration in debt affordability and fiscal deficits, either by materially increasing government revenues or reducing spending, could lead to an upgrade.
A significantly faster and larger deterioration in fiscal metrics than we currently expect would weigh on the rating. A rapid move out of dollar assets by global investors could precipitate such a deterioration if it resulted in much higher interest rates, causing the interest burden to rise faster than we currently expect. We do not consider this to be a likely scenario since a credible alternative to the US dollar as global reserve currency is not readily apparent.
The rating also could be downgraded if policy effectiveness or the strength of institutions were to erode to such a degree that materially weakens the sovereign’s credit profile. This would be the case if it were to lead to a deterioration in medium-term growth or economic resilience to shocks, or if it was accompanied by a significant and lasting move by global investors out of the US dollar.
LIST OF AFFECTED RATINGS
..Issuer: United States of America, Government of
Downgrades:
…. LT Issuer Rating (Local currency), Downgraded to Aa1 from Aaa
…. LT Issuer Rating (Foreign currency), Downgraded to Aa1 from Aaa
…. Senior Unsecured (Local currency), Downgraded to Aa1 from Aaa
Outlook Actions:
….Outlook, Changed to Stable from Negative
The principal methodology used in these ratings was Sovereigns published in November 2022 and available at https://ratings.moodys.com/rmc-documents/395819. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.
The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.
For any affected securities or rated entities receiving direct credit support/credit substitution from another entity or entities subject to a credit rating action (the supporting entity), and whose ratings may change as a result of a credit rating action as to the supporting entity, the associated regulatory disclosures will relate to the supporting entity. Exceptions to this approach may be applicable in certain jurisdictions.
For ratings issued on a program, series, category/class of debt or security, certain regulatory disclosures applicable to each rating of a subsequently issued bond or note of the same series, category/class of debt, or security, or pursuant to a program for which the ratings are derived exclusively from existing ratings, in accordance with Moody’s rating practices, can be found in the most recent Credit Rating Announcement related to the same class of Credit Rating.
For provisional ratings, the Credit Rating Announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.
Moody’s does not always publish a separate Credit Rating Announcement for each Credit Rating assigned in the Anticipated Ratings Process or Subsequent Ratings Process.
These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
The Global Scale Credit Rating(s) discussed in this Credit Rating Announcement was(were) issued by one of Moody’s affiliates outside the EU and UK and is(are) endorsed for use in the EU and UK in accordance with the EU and UK CRA Regulation.
Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.
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After months of baseless claims about “extreme levels of fraud” within Social Security, Musk’s DOGE has found only 2 likely fraudulent claims out of over 110,000—that makes it a rate of .0018%.
So DOGE found virtually no fraud and made an integral American system less efficient.
No need to tell this story to local Trumpanzee’s. They are brainwashed to the max, dumb, unable to comprehend intelligent reporting.
Many local Trumpsters are what is considered intelligent. But if they still believe Trump is for the American people, they are only one thing. That would be FUKING IDIOTS. Obviously if they think Trumpamania is a good thing, they are behind the intelligence curve. They are fuking stupid. That’s all, stupid.
Case closed.
^^ Thank you CNN for reporting
And now back to our sponsor and the number ONE in TV Ratings, Saturday Mornings Cartoon for Dummycrats.
Atta Boy Trump!!!! It’s only going to get worse. He will Bankrupt America just like he did with so many of his businesses. He is just like PT Barnum and believes there is a sucker born every minute. He and his family enriched themselves at the expense of the poor.
Yeah we will get some sort of truth from them not like Faux News that has been successfully sued for libel and slander for millions which once again kiddies mean they LIE to you . As far as I know CNN has never been successfully sued for such Felonies. So I’ll keep media sourcing to find some faximaly of the truth,
I really enjoyed the leaked audio of Biden and Hur’s . No wonder the dems didn’t want America to hear Biden forgetting when he was VP, when he was POTUS, when his son died, how his son died, and forgetting which question he was answering, let alone trying to form a sentence.
AG Pamela Bondi has been asked to look into felony Elder Abuse charges, and said she was already looking into Bidens WH Physician Dr Kevin O’Conner
You won’t find truth in this rag……..
Trump not dragging his beach chair in the sand.
Put your best man forward Ass Hole.
We don’t have one.
That’s what your wife told the Hells Angels at the fair!!!!!!!!!!!
^^^ Did you graduate from Sniveler High over on live oak ct.?
We can’t we have to live with your A$$ Clown for three more years. That’s how Republics work. We can’t just run around and say “Stop the Steal “ it just makes you look stupid. We all have to live with this Fu€k stain Trump is leaving on America.
Maybe we should attack the Capitol and run the Rebel Flag around it. MAGA SHEEP!
Haaaaahaaaaa!!!!! Lying, Cheating, Crooked Trump!! Haaaaaaahaaaaaaaaaaa!!!!!!!HoooooHeeeeee!!!
Thank You President Trump for Making America Great AGAIN! Isn’t the shits to be a sore loser?
I’m proud to parade around wearing my Daisy Dukes with the open fly on backwards, Sniveler
Yes it does suck to lose it’s all part of growing up and becoming an adult. What we should do is fraudulently proclaim an election is stolen, attack our Nations Capitol and kill a few cops. Then get large flags that say Stop the Steal and parade around with them on my small penis mobile. Then to spruce up the neighborhood I’ll get a giant Fu€k Biden flag and fly it proudly in my front yard. MAGA hypocrisy at its best.
Has anyone seen my auto-pen? Joe you’re no longer in office.
This guy thinks Joe is still President. Poor, stupid Trumpet
Have you noticed, this makes democrats happy?
The party of hate and violence are happy. No wonder you lost everything in the election, including millions of your own voters.
You sir or madam are an idiot. Nothing but death threats and violence from the MAGA Bunch. That’s there calling card. Your people took over the Nations Capitol killed people injured many. Who is violent.
Oh well that’s a witty retort. You a MAGA MORON. I refuse to have a battle of wits with an unarmed man.
He thinks parroting the Orange Turd makes him look tough and smart. What a CLOWN!!!
I guess the bottom line here is sadly the United States credit rating is going in the tank due to poor Trump policy .
You said that Trump’s first term!
The Nat Debt was, is caused by the Republican tax cuts according to the OMB.
If you remove the tax cuts given the billionaires the debt is almost erased.
Sadly this fact is ignored by the media, and Democratic Reps.
Starting with Reagan, the Nat Debt rose and is now on steroids with the last trump tax cuts.
Now they want $12 Trillion more.
When you lose representation in government this happens.
Only when the Justice Roberts anti Democracy decisions-Citizens United, and the anti voting laws allowed this.
So in red states Democratic voters are denied their vote , purged , and open bribery is now legal.
Thanks Roberts. He was the architect of what we have now- oligarchy.
Hate and violence??? Why don’t your Republicans MAGA FOOLS go beat a few cops to death. Maybe the MAGA shaman can help with that.
Local MAGA Trumpers are as stupid as it fuking gets. Bottom line, no doubt, case closed, as stupid and gullible as it gets. Enjoy the fair MAGATTS.
Democrats are done, Well Done.
Destroying the economy. Right in front of these people. And still can’t get them to admit. Trumps a complete and total disaster.
This self inflicted economic collapse. This all is on the ignorance of stupid donald (felon) trump.
Good day to buy Tesla stock.
The House GOP last night approved Medicaid cuts that will kick millions off insurance & shrink after-tax income for many families in the bottom income quintile
Hard to fathom how unpopular this is. Just 14% of voters wants to cut Medicaid to pay for tax cuts
The House GOP last night approved Medicaid cuts that will kick millions off insurance & shrink after-tax income for many families in the bottom income quintile
Hard to fathom how unpopular this is. Just 14% of voters wants to cut Medicaid to pay for tax cuts
Hopefully. The Donald will have a massive stoke today. And become a bed ridden invalid. So we can cancel his health care.
Looks like biden will be beating Trump to be bed ridden First…,,,
Trump will die in prison
How about he dies today??? Anyway possible…..just die.