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6h ago

Moody's Downgrades U.S. and Maryland Credit Ratings Over Rising Debt

The United States loses its last triple-A rating as Moody's cites unsustainable fiscal trends, while Maryland faces potential local cost pressures after a similar downgrade.

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FILE - This Aug. 13, 2010 photo shows a sign for Moody's Corp. in New York. Moody's Investors Service upgraded the outlook for U.S. government debt to "stable" from "negative" and affirmed the United States' blue chip Aaa rating on Thursday, July 18, 2013. The rating agency cited a surprising drop in the federal deficit - the difference between what the government collects in taxes and what it spends. The U.S. government is on track to report its lowest annual deficit in five years. (AP Photo/Mark Lennihan)

Overview

  • Moody's has downgraded the U.S. credit rating from Aaa to Aa1, marking the end of its triple-A status across all major rating agencies.
  • Maryland's credit rating was also reduced from Aaa to Aa1, the first such downgrade in decades, raising concerns about potential cost shifts to local governments.
  • The downgrades reflect over a decade of rising federal debt, interest burdens, and persistent budget deficits, now exceeding $1 trillion annually.
  • Moody's projects U.S. federal deficits to widen to nearly 9% of GDP and debt to reach 134% of GDP by 2035, driven by entitlement spending and interest costs.
  • Treasury yields rose following the announcement, signaling higher borrowing costs for the federal government and potential ripple effects for state and local budgets.