Moody\u2019s downgraded the US sovereign credit rating on Friday due to concerns about the nation\u2019s growing $36 trillion debt pile in a move that could complicate President Donald Trump\u2019s efforts to cut taxes and send ripples through global markets.<\/p>\n
Moody\u2019s first gave the United States its pristine \u201cAaa\u201d rating in 1919 and is the last of the three major credit agencies to downgrade it.<\/p>\n
\u201cSuccessive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,\u201d Moody\u2019s said on Friday, as it changed its outlook on the US to \u201cstable\u201d from \u201cnegative\u201d.<\/p>\n
The announcement drew criticism from people close to Trump.<\/p>\n
Stephen Moore, former senior economic adviser to Trump and an economist at Heritage Foundation, called the move \u201coutrageous\u201d. \u201cIf a US backed government bond isn\u2019t triple A-asset then what is?\u201d he told Reuters.<\/p>\n
White House communications director Steven Cheung reacted to the downgrade via a social media post, singling out Moody\u2019s economist, Mark Zandi, for criticism. He called Zandi a political opponent of Trump.<\/p>\n
Zandi declined to comment. Zandi is the chief economist at Moody\u2019s Analytics, which is a separate entity from the credit ratings agency Moody\u2019s.<\/p>\n
Since his return to the White House on January 20, Trump has said he would balance the budget while Treasury Secretary Scott Bessent has repeatedly said the current administration aims to lower US government funding costs.<\/p>\n
But the administration\u2019s attempts to raise revenue and cut spending have so far failed to persuade investors.<\/p>\n
Trump\u2019s attempts to cut spending through Elon Musk\u2019s Department of Government Efficiency have fallen far short of its initial goals. And attempts to raise revenue through tariffs have sparked concerns about a trade war and global slowdown, roiling markets.<\/p>\n
Left unchecked, such worries could trigger a bond market rout and hinder the administration\u2019s ability to pursue its agenda.<\/p>\n
The downgrade, which came after market close, sent yields on Treasury bonds higher, and analysts said it could give investors a pause when markets re-open for regular trading on Monday.<\/p>\n
\u201cIt basically adds to the evidence that the United States has too much debt,\u201d said Darrell Duffie, a Stanford finance professor who was formerly on Moody\u2019s board. \u201cCongress is just going to have to discipline itself, either get more revenues or spend less.\u201d<\/p>\n
Focus on deficits
\nTrump is pushing lawmakers in the Republican-controlled Congress to pass a bill extending the 2017 tax cuts that were his signature first-term legislative achievement, a move that nonpartisan analysts say will add trillions to the federal government\u2019s debt.<\/p>\n
The downgrade came as the tax bill failed to clear a key procedural hurdle on Friday, as hardline Republicans demanding deeper spending cuts blocked the measure in a rare political setback for the Republican president in Congress.<\/p>\n
Moody\u2019s said the fiscal proposals under considerations were unlikely to lead to a sustained, multi-year reduction in deficits, and it estimated the federal debt burden would rise to about 134 per cent of gross domestic product (GDP) by 2035, compared with 98pc in 2024.<\/p>\n
\u201cMoody\u2019s downgrade of the United States\u2019 credit rating should be a wake-up call to Trump and Congressional Republicans to end their reckless pursuit of their deficit-busting tax giveaway,\u201d Senate Democratic Leader Chuck Schumer said in a statement on Friday.<\/p>\n
\u201cSadly, I am not holding my breath.\u201d<\/p>\n
The cut follows a downgrade by rival Fitch, which in August 2023 also cut the US sovereign rating by one notch, citing expected fiscal deterioration and repeated down-to-the-wire debt ceiling negotiations that threaten the government\u2019s ability to pay its bills.<\/p>\n
Fitch was the second major rating agency to strip the US of its top triple-A rating, after Standard & Poor\u2019s did so after the 2011 debt ceiling crisis.<\/p>\n
\u201cThey have got to come up with a credible budget agreement that puts the deficit on a downward trajectory,\u201d said Brian Bethune, an economics professor at Boston College, referring to Republican lawmakers.<\/p>\n","protected":false},"excerpt":{"rendered":"
Moody\u2019s downgraded the US sovereign credit rating on Friday due to concerns about the nation\u2019s growing $36 trillion debt pile in a move that could complicate President Donald Trump\u2019s efforts to cut taxes and send ripples through global markets. Moody\u2019s first gave the United States its pristine \u201cAaa\u201d rating in 1919 and is the last […]<\/p>\n","protected":false},"author":1,"featured_media":9229,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-9228","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-news"],"_links":{"self":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9228","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9228"}],"version-history":[{"count":1,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9228\/revisions"}],"predecessor-version":[{"id":9230,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9228\/revisions\/9230"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/media\/9229"}],"wp:attachment":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}