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Moody’s Downgrades U.S. and Maryland Credit Ratings, Ending U.S. AAA Era

The U.S. loses its last AAA credit rating, while Maryland faces its first Moody’s downgrade in decades, raising concerns over fiscal pressures and borrowing costs.

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The downgrade comes as the Republican-controlled Congress tries to extend tax cuts from President Donald Trump's first term and add new ones.
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In this file photo, Ted Zaleski discusses the book “President Garfield; From Radical to Unifier” with author C.W. “Charlie” Goodyear at Carroll Lutheran Village – Krug Chapel, Saturday July 8, 2023. Zaleski is the budget and finance director for Carroll County.

Overview

  • Moody’s has downgraded the U.S. credit rating from Aaa to Aa1, citing rising debt levels and escalating interest burdens.
  • This marks the first time in history that no major credit rating agency assigns the U.S. a AAA rating, reflecting persistent fiscal challenges.
  • Maryland’s credit rating was also downgraded by Moody’s from Aaa to Aa1, breaking a decades-long streak, though Fitch maintained Maryland’s AAA status.
  • The U.S. federal deficit has reached $1.05 trillion year-to-date, a 13% increase from the previous year, contributing to the downgrades.
  • Local governments in Maryland brace for potential higher borrowing costs and tax pressures as the state’s downgraded rating could affect funding for shared projects.