Bad news for Trump, Moody’s downgrades US credit rating on soaring debt

In a significant blow to former President Donald Trump’s narrative of economic strength, credit rating agency Moody’s has downgraded the United States’ long-term credit rating from Aaa to Aa1, marking the country’s loss of its last triple-A rating from a major agency.

The downgrade coincided with the failure of Trump’s proposed spending bill to pass through Congress, compounding the political fallout. Moody’s cited mounting government debt and surging interest payment ratios as core reasons for the decision, warning that these indicators now far exceed those of similarly rated sovereigns.

The agency forecast that federal deficits will widen to nearly 9% of GDP by 2035—up from 6.4% last year—driven largely by increased interest payments on debt, rising entitlement spending, and relatively stagnant revenue generation. It also projected that the federal debt burden will rise to approximately 134% of GDP by 2035, compared to 98% in the previous year.

White House communications director Steven Cheung responded via social media, directing criticism at Moody’s chief economist Mark Zandi, labelling him a political opponent of President Trump. “Nobody takes his analysis seriously. He has been proven wrong time and time again,” Cheung wrote on platform X.

Moody’s move follows similar decisions by the other two major U.S. credit rating agencies, S&P and Fitch. S&P was the first to strip the U.S. of its triple-A rating in 2011 during Barack Obama’s first term, citing concerns over the country’s debt trajectory and the lack of a credible long-term fiscal plan.

In its statement, Moody’s echoed those earlier warnings, stating: “The U.S. fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns.” It added that current fiscal proposals do not offer material, multi-year reductions in mandatory spending or deficits.

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