US Loses Last Top Credit Rating With Downgrade From Moody’s

They have got to come up with a credible budget agreement that puts the deficit on a downward trajectory,

said Boston College professor Brian Bethune

The downgrade of the US credit rating by Moody's is a continuation of a long trend of fiscal irresponsibility that will eventually lead to higher borrowing costs for the public and private sector in the United States,

warned Spencer Hakimian, CEO of Tolou Capital Management

This news comes at a time when the markets are very vulnerable and so we are likely to see a reaction,

said Jay Hatfield, CEO at Infrastructure Capital Advisors

It basically adds to the evidence that the United States has too much debt,

said Stanford finance professor Darrell Duffie

If a US backed government bond isn't triple A-asset then what is?”

Stephen Moore, a former Trump economic advisor and now with the Heritage Foundation, labelled the downgrade “outrageous,” questioning

The downgrade may indicate that investors will demand higher yields on Treasuries,

said Tracy Chen, a portfolio manager at Brandywine Global Investment Management

While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,

Moody’s wrote in a statement

The debt numbers are indeed scary,” and a crisis would involve “a sudden stop in the economy as credit would disappear,”

he said

Chuck Schumersenate Democratic Leader

Moody's downgrade of the United States' credit rating should be a wake-up call to Trump and Congressional Republicans to end their reckless pursuit of their deficit-busting tax giveaway,

US Senate Democratic Leader Chuck Schumer said in a statement on Friday

Nobody takes his ‘analysis’ seriously. He has been proven wrong time and time again,

Cheung said

We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration,

Moody's said, while forecasting federal debt burden to rise to about 134 per cent of GDP by 2035, compared with 98 per cent in 2024.

The US' fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns,

Moody's said

Its long history of very effective monetary policy led by an independent Federal Reserve" has maintained a "stable.",

Moody

While these institutional arrangements can be tested at times, we expect them to remain strong and resilient,

the agency said

Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,

Moody's said

This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,

the ratings agency said in a statement

Moreover, the resilience of the US sovereign rating to shocks is supported by strong monetary and macroeconomic policy institutions. Although policy has been less predictable in recent months, relative to what has typically been the case in the US and other highly-rated sovereigns, we expect that monetary and macroeconomic policy effectiveness will remain very strong, preserving macroeconomic and financial stability through business cycles,

Moody's stated