The White House makes for a haunting image – the perfect dusk on September 30, 2023 in Washington, DC. Samuel Corum’s stunning visual captivates!
Moody’s Investors Service on Friday downgraded the ratings outlook on the United States’ government to negative from stable, citing escalating risks to the nation’s fiscal strength.
Despite this change, the agency affirmed the U.S.’ long-term issuer and senior unsecured ratings at Aaa.
“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” the agency said. “Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”
Furthermore, Moody’s also highlighted the impact of political polarization in Washington, which raises concerns over reaching a consensus on a fiscal plan, exacerbating the decline in debt affordability.
Moody’s statement mentions that the U.S. is expected to “retain its exceptional economic strength” despite the negative outlook, and could see an improvement in debt affordability if positive economic growth surprises emerge.
Reacting to Moody’s stance, Deputy Secretary of the Treasury, Wally Adeyemo, expressed disagreement, asserting the resilience of the American economy and Treasury securities.
The recent change in Moody’s outlook arrives as Congress grapples with the impending threat of a government shutdown, fueling uncertainty and tension in Washington.
The escalation of political standoff and debt challenges have stirred up a contentious atmosphere, leading to a ripple of consequences, including Fitch’s downgrade of the U.S. long-term foreign currency issuer default rating to AA+ from AAA earlier in August.
