TechFlow, May 18 — According to Cointelegraph, credit rating agency Moody's downgraded the U.S. government's credit rating from the highest level Aaa to Aa1 due to rising national debt.
In an announcement on May 16, Moody's stated that U.S. lawmakers have failed to curb annual deficits or reduce spending, leading to continued growth in national debt. The agency said: "We believe that the fiscal proposals currently under consideration will not result in meaningful, multi-year reductions in mandatory spending and deficits. Over the next decade, as benefit expenditures rise while government revenues remain largely unchanged, we expect deficits to widen."
Although the short- to medium-term credit outlook is negative, Moody's maintains a positive long-term view of the U.S. economy, citing strong economic fundamentals and the dollar's status as the world's reserve currency as strengths that reflect a 'balanced' borrowing risk profile.
U.S. government debt surpassed $36 trillion in January 2025. Despite recent efforts by figures such as Elon Musk to reduce federal spending and cut national debt, there are no signs of slowdown. As debt rises and investor confidence in U.S. government securities declines, bond yields will surge, increasing debt servicing costs and further driving up the national debt.
