The United States has lost its final triple-A credit rating from a major ratings agency, as Moody’s downgraded the country’s long-term credit score on Friday, May 16, citing escalating government debt and long-term fiscal challenges. The move represents a significant blow to President Donald Trump’s economic narrative, which emphasizes strength and prosperity under his administration.
Moody’s downgraded the U.S. rating from Aaa to Aa1, aligning its assessment with earlier downgrades by S&P and Fitch. In its explanation, Moody’s pointed to “the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.” The agency projected that federal deficits would expand to nearly nine percent of GDP by 2035, up from 6.4 percent in 2023, due primarily to increased interest payments, rising entitlement costs, and stagnant revenue growth.
Moody’s forecasted that the federal debt burden would balloon to 134 percent of GDP by 2035, compared to 98 percent last year. The announcement came on the same day that Trump’s major spending bill failed to advance in Congress, blocked by Republican fiscal conservatives who oppose the bill’s scope and cost. The plan includes a multi-trillion-dollar extension of the 2017 tax cuts and proposed deep reductions to Medicaid, which currently supports more than 70 million low-income Americans.
In response to the downgrade, the White House criticized Moody’s, particularly targeting Mark Zandi, chief economist at Moody’s Analytics. “Nobody takes his ‘analysis’ seriously. He has been proven wrong time and time again,” posted White House communications director Steven Cheung on X.
Moody’s decision echoed the concerns expressed in previous downgrades. S&P had first lowered the U.S. credit rating in 2011 under President Barack Obama, citing a lack of political consensus on debt management. Fitch followed in 2023, warning of a long-term erosion in governance standards related to fiscal matters.
On Friday, May 16, Moody’s noted that successive administrations and Congress have failed to implement effective measures to reverse growing deficits and interest obligations. The agency said it does not believe current fiscal proposals will produce material, long-term reductions in spending or deficits.
“America’s fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns,” the agency said in its report.
Congressman French Hill, a Republican who chairs the House Financial Services Committee, said the downgrade “is a strong reminder that our nation’s fiscal house is not in order.” He reaffirmed the GOP’s commitment to restoring fiscal stability and addressing structural drivers of the debt.
On the other side of the aisle, Democratic Congressman Brendan Boyle, ranking member of the House Budget Committee, viewed the downgrade as a “direct warning” and blamed Republican strategies for worsening the fiscal outlook. “The question is whether Republicans are ready to wake up to the damage they’re causing,” he said.
Despite the downgrade, Moody’s shifted its U.S. credit outlook from “negative” to “stable,” noting that the country still holds substantial credit strengths. These include the scale and resilience of the U.S. economy, along with the continued dominance of the U.S. dollar as the global reserve currency.
