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The US has lost its last perfect credit rating, as influential ratings firm Moody’s expressed concern over the government’s ability to pay back its debt.<\/p>\n\n\n\n
In lowering the US rating from ‘AAA’ to ‘Aa1’, Moody’s noted that successive US administrations had failed to reverse ballooning deficits and interest costs.<\/p>\n\n\n\n
A triple-A rating signifies a country’s highest possible credit reliability, and indicates it is considered to be in very good financial health with a strong capacity to repay its debts.<\/p>\n\n\n\n
Moody’s warned in 2023 the US triple-A rating was at risk. Fitch Ratings downgraded the US in 2023 and S&P Global Ratings did so in 2011. Moody’s held a perfect credit rating for the US since 1917.<\/p>\n\n\n\n
The downgrade “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” Moody’s said in the statement.<\/p>\n\n\n\n
In a statement, the White House said it was “focused on fixing Biden’s mess”, while taking a swipe at Moody’s.<\/p>\n\n\n\n
“If Moody’s had any credibility,” White House spokesman Kush Desai said, “they would not have stayed silent as the fiscal disaster of the past four years unfolded.”<\/p>\n\n\n\n
A lower credit rating means countries are more likely to default on their sovereign debt, and generally face higher borrowing costs.<\/p>\n\n\n\n
Moody’s maintained that the US “retains exceptional credit strengths such as size, resilience and dynamism and the continued role of the US dollar as the global reserve currency”.<\/p>\n\n\n\n
The firm said it expects federal debt to increase to around 134% of gross domestic product (GDP) by 2035, up from 98% last year.<\/p>\n\n\n\n
GDP is a measure of all the economic activity of companies, governments, and people in a country.<\/p>\n\n\n\n
The BBC has reached out to the US Department of Treasury for comment.<\/p>\n\n\n\n
The downgrade came on the same day as Trump’s landmark spending bill<\/a> suffered a setback in Congress.<\/p>\n\n\n\n Trump’s so-called “big, beautiful bill” failed to pass the House Budget Committee, with some Republicans voting against it.<\/p>\n\n\n\n