Rating agency Moody’s Investors Service on Friday downgraded its outlook on the U.S. government to “negative” from “stable,” citing the rising risks to the nation’s large fiscal deficits and declining debt affordability.
“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, as Congress faces the looming threat of a government shutdown once again.
Moody’s has affirmed the long-term issuer and senior unsecured ratings of the United States at Aaa. “In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expected that the U.S. fiscal deficits will remain very large, significantly weakening debt affordability,” it said.
Moody’s is the last of the three major rating agencies to maintain a triple-A rating for the U.S. government.