Moody's Downgrades U.S. Credit Rating Amid Rising National Debt Concerns

Moody's downgraded the United States to Aa1 from Aaa on Friday because of growing government debt and this move challenged Donald Trump's economic strength claims.

The downgrade from Aaa to Aa1 marked more trouble for the US president as his major spending bill met defeat in a critical congressional vote amid Republican fiscal hawks' resistance.

The ratings agency explained its decision by pointing to the government debt and interest payment ratios which have climbed above levels found in similarly rated sovereigns over more than ten years.

Moody's anticipates federal deficits will rise to nearly nine percent of economic output by 2035 from 6.4 percent in the previous year because of higher interest payments on debt along with increasing entitlement costs and limited revenue growth.

Moody's prediction indicates that the federal debt burden will reach approximately 134 percent of GDP by 2035 from its previous level of 98 percent.

Moody's reduced the United States to its minimum credit standing through their latest rating which coincides with former downgrades by S&P and Fitch.

Standard & Poor's first reduced the United States credit rating during Barack Obama's initial term in office in 2011 because it anticipated the need for a debt management strategy to stabilize medium-term debt levels."

A full decade and two years after S&P's downgrade of the United States, Fitch also issued an alert about the persistent decline in governance standards throughout two decades which affected fiscal and debt management.

Moody's affirmed its rating decision the same way its competitors did by pointing out that US governments and Congresses have been unable to develop solutions to halt growing annual fiscal deficits and rising interest costs.