On Friday (November 10th) local time, rating giant Moody's Investors Service announced on its official website that it has adjusted its outlook for the US rating from "stable" to "negative".
Currently, Moody's is the only one of the three major international credit rating agencies that still maintains the AAA rating of the United States. In August of this year, Fitch downgraded the US credit rating from AAA to AA+, and S&P's operation dates back to 2011.
When Fitch downgraded, it stated that the United States has repeatedly experienced political stalemate on the debt ceiling, often delaying solutions until the last moment, weakening people's confidence in the United States' fiscal management capabilities. Moody's also wrote in its latest report that the downward risks facing the US fiscal strength have increased.
Moody's pointed out that since the beginning of the year, the yield of US treasury bond bonds has risen significantly, increasing the burden of US debt. In addition, the polarized government structure in Congress may hinder policy actions to alleviate the deterioration of debt sustainability, leading to further limitations on the effectiveness of policy formulation.
In September of this year, Moody's stated that the potential "shutdown" of the US government would indicate that political polarization is exacerbating significant constraints on fiscal decision-making. At the end of that month, Congress passed a temporary federal funding bill to avoid the shutdown of some federal government agencies at the last minute.
However, the validity period of this bill is 45 days, which means that the period for providing support for the operation of the federal government will expire on November 17th. To avoid a government shutdown, Congress needs to reach an agreement on temporary spending measures, which will be signed into law by US President Biden before the deadline of November 18th.
Analysis suggests that Moody's actions are putting pressure on Republicans to advance legislation to avoid a government shutdown. LPL Financial, a financial services company, commented, "This reminds people that time is passing. The market is getting closer to realizing that we may eventually close down
Last month, after three weeks of being leaderless, the United States House of Representatives finally welcomed the new Speaker of the House, Mike Johnson. This process exposed the ideological conflicts within the Republican Party, which made it difficult to unite internally.
White House spokesperson Karine Jean Pierre stated that Moody's downward outlook is "another consequence of congressional Republican extremism and dysfunction". Johnson countered that this was a failure of Biden's reckless spending agenda.
Moody's Senior Vice President William Foster said in an interview that as the 2024 US election approaches, reaching a bipartisan consensus in Congress will only become more difficult. "We need to see evidence that the government will reduce the deficit or increase income by reducing spending or other measures