U.S. government loses last perfect credit rating

The Moody’s credit-rating firm on Friday downgraded the United States' rating for the first time since 1917. The firm changed its perfect AAA rating for the government to AA1, it said. Moody’s cited concerns about the country’s ability to pay its rising debt, the Associated Press reported. The other two major credit-rating agencies, S&P and Fitch Ratings, previously lowered federal credit ratings in 2011 and 2023, respectively.

Moody’s expected federal deficits to reach nearly 9% of the U.S. economy by 2035, up from 6.4% in 2024. It said the United States wasn’t generating enough revenue to outpace increased interest payments on debt and rising spending on entitlement programs, according to the Associated Press.

Treasury Secretary Scott Bessent said Sunday that the government is addressing the deficit by working to grow the U.S. economy faster than the national debt.

What else did Moody’s say about the credit rating? The United States still has exceptional credit strengths: its large and dynamic economy and the dollar’s status as a global reserve currency, the firm said. However, Moody’s also expressed concern about the current House budget bill, which extends President Trump’s 2017 tax cuts. If passed, the budget would add $4 trillion to the federal deficit over the next decade, the firm said, according to the Associated Press.

Moody’s in November 2023 also made a negative comment on the government’s credit.

Dig deeper: Read my report on how fiscal conservatives narrowly let the budget bill advance on Sunday.