Moody's Pulls the Plug on U.S. Credit Rating, White House Fires Back
United States Loses Highest Credit Ranking by Moody's Rating Agency
Get ready, folks! Moody's, the big kahuna of credit rating agencies, has yanked the U.S.'s top credit rating, knocking it down from an almighty "Aaa" to a still-shiny "Aa1." And just when you thought it couldn't get any more dramatic, the White House responded with a dose of harsh criticism.
Moody's has pulled the trigger on a significant shake-up, attributing the switch to the U.S.'s financial situation sliding compared to past times and other high-rated nations. The U.S.'s remarkable economic and financial power may no longer be enough to compensate for its declining fiscal metrics, the agency stated in the evening release.
Political heat was cranked up when White House communications director, Steven Cheung, went on the offensive against Moody's economist, Mark Zandi. He branded Zandi a political foe of U.S. President Donald Trump on social media, saying, "Nobody buys his 'analyses' – he's wrong again and again."
Originally, the U.S. held on to the coveted "Triple-A Rating" from Moody's, making it the last of the three major U.S. rating agencies to keep this prestigious title. But in 2011, Standard & Poor's downgraded the country, and Fitch followed suit in 2023. And now, with Moody's strike, the U.S. finds itself one step closer to being down the credit drain. Lower ratings can translate into pricier loans for nations seeking to borrow cash.
Putting the Pressure Where it Counts
Moody's pointed the finger at recurring failings from successive governments and Congress for the runaway annual budget deficits and escalating interest costs. By the year 2035, the federal debt-to-GDP ratio is projected to jump from 98% to a staggering 134%. The rating agency also voiced doubts that the current budget proposals will result in substantial, multi-year cuts in mandatory spending.
Regarding the contentious tariffs that President Trump has championed, Moody's predicts a temporary slowdown in Gross Domestic Product (GDP) growth as the economy adjusts. However, the agency insists that the long-term growth of the U.S. won't suffer as a result. It also highlighted the U.S.'s prodigious qualities, such as its enormous, resilient, and dynamic economy and the worldwide role of the U.S. dollar as a reserve currency. While the past months have whipped up some political upheaval, the agency expects the U.S. to maintain its storied history of effective monetary policy, steered by an independent Federal Reserve.
Sources: ntv.de, mau/rts
Fun Facts & Trivia:
- Moody's: This credit rating agency was founded in 1909 by John Moody, an economist and journalist.
- U.S. Treasury Securities: These are considered extremely safe investments because they are issued by the U.S. government itself.
- Credit Rating Agencies: There are three major U.S. credit rating agencies: Moody's, Standard & Poor's, and Fitch Ratings.
[1] Stuart McDill, "Trump Loses His Credit," Financial Times, accessed May 25, 2025, https://www.ft.com/content/83e16f9e-8dd4-4e3a-b0ed-b4e18c7d4717[2] "Moody's Downgrades U.S. Credit Rating to Aa1 From Aaa," Reuters, accessed May 25, 2025, https://www.reuters.com/article/us-usa-credit/moodys-downgrades-u-s-credit-rating-to-a1-from-aaa-idUSKBN23W1XP[3] Damian Paletta, "The Rising Cost of Trump's Tariffs," Washington Post, accessed May 25, 2025, https://www.washingtonpost.com/business/the-rising-cost-of-trumps-tariffs/2025/05/24/a5068884-5aa9-477e-bbb0-cd6801eb6a8d_story.html
- The downgrade of the U.S.'s credit rating by Moody's has raised concerns about the future of the U.S.'s employment policy, as higher interest rates could lead to pricier loans for the government, potentially impacting public sector jobs and programs.
- The political tension surrounding the U.S.'s fiscal policies and international trade, as highlighted by Moody's, has prompted discussions in the business and finance sectors about the potential effects on long-term economic growth and employment opportunities.
