Moody's Lowers Outlook on U.S. Credit Rating to 'Negative'

Despite Criticism from Biden Administration, Moody's Affirms 'Aaa' Rating Amid Concerns of Large Fiscal Deficits and Potential Government Shutdown

Moody's has lowered its outlook on the U.S. credit rating to 'negative' from 'stable', citing large fiscal deficits and a decline in debt affordability. This move has drawn criticism from President Joe Biden's administration.
The downgrade follows a similar action by Fitch earlier this year, which was a result of political brinkmanship around the U.S. debt ceiling. Federal spending and political polarization have been a rising concern for investors.
Despite the negative outlook, Moody's affirmed its long-term issuer and senior unsecured ratings at 'Aaa', citing U.S. credit and economic strengths. Moody's is the last of the three major rating agencies to maintain a top rating for the U.S. government.
The Biden administration has defended its fiscal policies, pointing to over $1 trillion in deficit reduction measures included in a June agreement with Congress on raising the U.S. debt limit, and Biden’s proposal to reduce the deficit by nearly $2.5 trillion over the next decade.
The Moody's decision comes at a time when Biden's support has fallen sharply in the polls, and it could increase pressure on congressional Republicans to advance funding legislation to avert a partial government shutdown.