USA in the downward vigor: Moody's reduces creditworthiness for record debt!

USA in the downward vigor: Moody's reduces creditworthiness for record debt!

Vienna, Österreich - On May 18, 2025, the rating agency Moody’s downgraded the Credit rating of the United States from AAA on AA1. This is followed by similar decisions by Fitch and S&P, which have reduced their reviews in recent years. Moody’s mentions the main reason for this decision, the high state debt of the United States, which is significantly higher compared to other countries, such as [Statista] (https://de.statista.com/statistik/studie/157855/MAUR-MISTI-DER-HOCHEN-STATS- STASTHORGE/)

The gradation is attributed to an increase in the state debt and the associated costs for their operation over more than a decade. Moody’s recognizes the economic and financial strength of the United States, but sees a step backwards in state finances. The outlook for the United States was relied on "stable", although this does not reduce concern about the future financial health of the country.

financial challenges and deficits

The current US state budget has an annual deficit of almost two trillion dollars, which corresponds to over 6% of the gross domestic product (GDP). Moody’s predicts that this deficit could increase to almost 9% of GDP by 2035 without a course correction. This could endanger the attractiveness of government bonds that are currently considered "safe ports" for investors.

The discussions in the congress on tax and output plans could also increase the deficit. In addition, the savings directed by Elon Musk, which was used as a cost lowerer, have remained behind the expectations. President Trump has repeatedly underlined the urgency to reduce the deficit, especially after the announcement of import tariffs that the returns drove up for government bonds.

criticism of Moody’s and the outlook

The decision by Moody’s also led to criticism from the White House. Communication director Steven Cheung attacked Mark Zandi, the chief economist from Moody’s, who works in economic analysis and acts its department regardless of the rating area. This public dispute shows the tensions between the bid administration and the rating agencies that evaluate the financial stability of the country.