The United States’ fiscal strength has deteriorated in the past year and is headed for a multiyear decline due to increasing budget deficits and more expensive debt driven by higher interest rates, according to a Moody’s report. The latest report comes amid financial uncertainty spurred by tariffs and fears of an economic slowdown.
Moody’s was the last major rating agency to retain a top triple-A rating for U.S. sovereign debt, but it lowered its outlook to negative from stable in November 2023. The firm warned last year that elevated Treasury yields above 4% would challenge servicing the cost of U.S. debt.
Fitch cut its rating on U.S. debt by one notch to AA+ from AAA in 2023, citing fiscal deterioration and last-minute debt ceiling negotiations. Standard & Poor’s (S&P Global) had lowered its triple-A rating on U.S. debt in 2011. Typically, the lower a borrower's rating is, the higher its financing costs are.
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