The United States has lost its last remaining triple-A credit rating from a major ratings agency, as Moody’s downgraded the country’s long-term credit score on Friday, May 16. The agency cited rising government debt and persistent fiscal challenges, delivering a major setback to former President Donald Trump’s economic message of strength and stability.
Moody’s lowered the U.S. credit rating from Aaa to Aa1, bringing it in line with previous downgrades by Standard & Poor’s and Fitch. In its report, Moody’s pointed to a decade-long rise in federal debt and interest obligations, warning that these trends have pushed the U.S. beyond the debt levels seen in similarly rated nations.
The agency forecasted that federal deficits would grow to nearly 9% of GDP by 2035, up from 6.4% in 2023. Key drivers include rising interest costs, growing entitlement spending, and sluggish revenue growth. Moody’s also projected the national debt would reach 134% of GDP by 2035, up from 98% in 2024.
The downgrade was announced on the same day a major Trump-backed spending bill stalled in Congress, blocked by Republican lawmakers who criticized its cost. The bill sought to extend the 2017 tax cuts and included significant cuts to Medicaid, a program supporting over 70 million low-income Americans.
In response, the White House pushed back sharply against Moody’s, targeting Mark Zandi, chief economist at Moody’s Analytics. “Nobody takes his ‘analysis’ seriously. He’s been wrong time and time again,” said White House Communications Director Steven Cheung in a post on X.
Moody’s downgrade echoed concerns raised in earlier assessments. S&P first downgraded the U.S. in 2011 under President Obama, citing political gridlock over debt issues. Fitch followed in 2023, citing weakening governance standards tied to fiscal policy.
Moody’s criticized both Congress and successive administrations for failing to enact meaningful reforms to rein in debt or spending. The agency noted that current proposals do not appear sufficient to produce lasting deficit reductions.
“America’s fiscal performance is likely to deteriorate both in comparison to its past and relative to other highly rated countries,” the report said.
Republican Congressman French Hill, chair of the House Financial Services Committee, said the downgrade should serve as a wake-up call. “Our nation’s fiscal house is not in order,” he stated, emphasizing the GOP’s commitment to tackling structural debt issues.
Democratic Congressman Brendan Boyle, ranking member of the House Budget Committee, interpreted the downgrade as a direct warning. “This is the result of reckless Republican fiscal tactics,” he said, urging bipartisan action to restore financial discipline.
Despite the downgrade, Moody’s shifted the U.S. credit outlook from “negative” to “stable,” citing enduring strengths of the American economy, including its global scale and the U.S. dollar’s role as the dominant reserve currency.