Chicago Sunday, May 18, 2025
The United States has lost its last top-tier credit rating after Moody’s, a major credit ratings agency, raised concerns about the government’s ability to manage its growing debt.
Moody’s downgraded the U.S. from ‘AAA’ to ‘Aa1’, citing the persistent rise in deficits and interest payments that have gone unaddressed by multiple administrations. A ‘AAA’ rating represents the highest level of creditworthiness, indicating that a country is in excellent financial condition and can reliably repay its debts.
The agency had already issued a warning in 2023 that the U.S. risked losing its perfect rating. Other firms, including Fitch and S&P Global Ratings, downgraded the U.S. in 2023 and 2011 respectively. Moody’s had upheld the top rating for the U.S. since 1917. The recent downgrade, it said, reflects over a decade of rising debt levels and interest expenses, which now far exceed those of similarly rated countries.
Responding to the downgrade, the White House criticized Moody’s and emphasized its efforts to address the situation. Spokesman Kush Desai remarked, “If Moody’s had any credibility, they wouldn’t have remained silent during the financial mismanagement of the past four years.”
A reduced credit rating can make it more expensive for a country to borrow money and increases the risk of defaulting on its national debt.
Despite the downgrade, Moody’s acknowledged that the U.S. still possesses major credit strengths, including its economic size, flexibility, and the U.S. dollar’s dominant role as the world’s reserve currency.
Moody’s forecasts that U.S. federal debt will reach roughly 134% of its gross domestic product (GDP) by 2035, up from 98% in the previous year. GDP represents the total value of goods and services produced by a country’s economy.
