US loses final triple-A credit rating as Moody's cites rising debt and deficits

19/05/2025 02:27 AST

The United States has lost its last remaining perfect credit rating after Moody's downgraded the country's status from 'AAA' to 'Aa1', citing mounting concerns over debt sustainability and growing interest costs.

The downgrade, announced Friday, marks the first time since 1917 that Moody's has assigned anything less than a top-tier rating to U.S. government bonds.

The move follows earlier downgrades by S&P Global Ratings in 2011 and Fitch Ratings in 2023, making this the final blow to the U.S.'s decades-long status as a triple-A borrower.

Moody's said the decision reflects a significant and sustained increase in the federal debt burden and interest payment ratios, now well above levels of similarly rated economies.

The agency projected that U.S. debt will grow to 134% of GDP by 2035, up from 98% in 2024.

While acknowledging America's economic strengths - including the size and resilience of its economy and the central role of the U.S. dollar - the firm flagged the political gridlock and fiscal policy uncertainty as major risk factors.

In a statement, the White House responded by blaming the previous administration, saying, "We are focused on fixing Biden's mess."

White House spokesman Kush Desai added: "If Moody's had any credibility, they would not have stayed silent as the fiscal disaster of the past four years unfolded."

The downgrade coincided with a setback for President Donald Trump's proposed $2 trillion "big, beautiful" spending bill, which failed to advance out of the House Budget Committee after several Republican members broke ranks.

The downgrade and legislative defeat came as the U.S. economy showed signs of slowing.

The Commerce Department reported that GDP shrank at an annualized rate of 0.3% in Q1 2025, compared to 2.4% growth in the previous quarter.

The decline was attributed to falling government spending and a surge in imports ahead of anticipated tariffs.

Saudi Gazette