U.S. Loses Last AAA Credit Rating as Debt Woes Mount
Moody’s downgrade ends 107-year streak of top-tier assessment amid fiscal concerns
WASHINGTON — Moody’s Investors Service has downgraded the United States’ credit rating from AAA to Aa1, marking the first time the nation has lost its last remaining perfect credit score. The move reflects growing concerns about America’s $34 trillion debt burden and political gridlock over fiscal reforms.
Why This Matters
- Historic shift: Ends Moody’s AAA rating held since 1917
- Follows peers: Comes after Fitch (2023) and S&P (2011) downgrades
- Economic impact: May gradually increase government borrowing costs
Key Reasons for Downgrade
✔ Debt explosion: Projected to reach 134% of GDP by 2035
✔ Political paralysis: “Successive administrations” failed to address deficits
✔ Interest burden: Payments now consume 14% of federal revenue
Market & Political Fallout
- White House response: Blamed “Biden’s fiscal mess,” questioned Moody’s timing
- Market reaction: Muted due to dollar’s reserve currency status
- Economic context: Coincides with Q1 contraction (-0.3% growth)
Broader Implications
The downgrade came as:
- Trump’s spending bill failed in Congress
- Businesses rushed imports ahead of new tariffs
- Election-year economic debate intensifies