The United States is one step closer to losing its last perfect credit rating after Moody’s Investors Service changed the outlook of the nation’s debt to negative on Friday after markets closed.
While the move does not automatically mean it will downgrade America’s creditworthiness, it increases the chances.
The nation’s diminished fiscal strength, undone by extreme partisanship in Washington, was a key driver of the action, according to a statement from Moody’s.
”In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability,” the statement said.
“Continued political polarization within US Congress” also played a major role in the committee’s decision. This, they said, “raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.”
Moody’s is the only one of the three major credit rating agencies to assign the United States an outstanding rating of AAA, which it has maintained since 1917.
Standard and Poor’s downgraded the United States for the first time in 2011, following the debt ceiling standoff then. In August, Fitch Ratings knocked America’s credit rating down after the most recent debt ceiling debate.
This story is developing and will be updated.
Read the full article here