The United States has lost its last perfect credit rating from a major agency, after Moody’s Investors Service downgraded the country’s sovereign credit rating from “Aaa” to “Aa1” on Friday. The move, driven by mounting concerns over America’s ballooning $36 trillion national debt and persistent fiscal deficits, marks a symbolic blow to President Donald Trump’s economic agenda.
Moody’s had awarded the U.S. its highest possible credit rating since 1919. With this latest downgrade, all three major credit rating agencies—Moody’s, Fitch, and S&P Global—have now stripped the U.S. of its top-tier rating. Fitch downgraded the U.S. in 2023, and S&P did so in 2011.
In its statement, Moody’s cited long-standing political gridlock in Washington as a key factor behind its decision. “Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” the agency said. It also adjusted its outlook for the U.S. from “negative” to “stable,” suggesting it does not expect further downgrades in the near term.
The downgrade could complicate President Trump’s plans to implement sweeping tax cuts and reduce government borrowing costs. Since returning to the White House in January, Trump has pledged to balance the federal budget, while Treasury Secretary Scott Bessent has emphasized efforts to lower the cost of financing government debt.
The announcement sparked immediate backlash from figures aligned with the Trump administration. Stephen Moore, a former senior economic adviser to Trump and now affiliated with the Heritage Foundation, called the move “outrageous.” “If a U.S.-backed government bond isn’t a Triple-A asset, then what is?” Moore said.
White House communications director Steven Cheung took aim at Mark Zandi, chief economist at Moody’s Analytics, accusing him of political bias. However, Zandi does not work for the credit ratings division that issued the downgrade; Moody’s Analytics is a separate research arm of the firm.
The credit rating cut raises the risk of higher borrowing costs for the U.S. government and could unsettle global financial markets, where U.S. Treasury bonds are widely viewed as among the safest investments. Analysts say the downgrade also sends a strong message about the urgency of addressing the nation’s long-term fiscal trajectory.
While the immediate market impact remains to be seen, Moody’s warning serves as a reminder that even the world’s largest economy is not immune to the consequences of rising debt and political impasse.
