Moody's Downgrades U.S. Credit Rating Amid Mounting Debt Concerns
Moody's has downgraded the U.S. sovereign credit rating, reflecting concerns over the country's increasing debt, now $36 trillion. This move could complicate tax cut efforts and affect global markets. The downgrade follows similar actions by Fitch and challenges the U.S. to address its fiscal policies.
In a significant move with global implications, Moody's downgraded the U.S. sovereign credit rating due to the nation's escalating $36 trillion debt. This decision might hinder President Trump's tax cut initiatives, affecting both domestic and international markets. Moody's first granted the U.S. its elite 'Aaa' status in 1919 and is the last of the primary credit agencies to issue a downgrade.
The agency's decision to reduce the rating by one notch to 'Aa1' this past Friday follows a marked change earlier in 2023 concerning the U.S.'s fiscal outlook amid widening deficits and escalating interest costs. According to Moody's, successive U.S. administrations have struggled to implement measures reversing the trend of rising fiscal deficits and interest expenses. Consequently, Moody's has adjusted its outlook for the U.S. from 'negative' to 'stable.'
This move has sparked backlash, drawing criticism from Trump affiliates, such as Stephen Moore, who labeled the downgrade as 'outrageous.' Meanwhile, the White House communications director criticized Moody's economist Mark Zandi on social media, though Zandi declined to comment. With Trump pushing for tax bill extensions and encountering legislative hurdles, the U.S.'s fiscal future remains uncertain.
(With inputs from agencies.)
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