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The U.S. credit rating outlook was lowered from “stable” to “negative” this week by Moody’s Investors Services as another government shutdown looms.
“Continued political polarization within U.S. Congress 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 said in a statement.
It added, “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.”
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House members are trying to hash out a temporary spending measure to try to avoid a government shutdown next Friday. (Stefan Zaklin/Getty Images/File / Getty Images)
Republicans in the House are expected to try to avoid a shutdown by releasing a temporary spending measure Saturday, as newly elected House Speaker Mike Johnson continues to negotiate with members before federal funding runs out next Friday.
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“While the statement by Moody’s maintains the United States’ AAA rating, we disagree with the shift to a negative outlook,” Deputy Treasury Secretary Wally Adeyemo said in a statement. “The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset.”
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White House spokesperson Karine Jean-Pierre called it “yet another consequence of congressional Republican extremism and dysfunction.”
While Moody’s kept the United States’ AAA credit rating, the two other major credit rating agencies S&P and Fitch have been lowered it to AA+, which Fitch did in August. S&P lowered its rating in 2011.
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The deficit jumped from $1.38 trillion to $1.7 trillion in the budget year that ended Sept. 30.
Reuters contributed to this report.
