International credit rating agency Moody’s yesterday changed its outlook on the U.S. from “stable” to “negative.” The higher interest rates and the continued massive deficits pushing the national debt up at a rapid rate were key. Bloomberg quoted William Foster, a senior credit officer of Moody’s, as saying in an interview: “Interest rates have shifted materially and structurally higher. This is the new environment for rates. Our expectation is that these higher rates and deficits around 6% of GDP for the next several years, and possibly higher, means that debt affordability will continue to pressure the U.S.”
But the good news is that Moody’s is the only one of the three major credit rating agencies that hasn’t yet downgraded the actual rating. Earlier this year, Fitch had done just that; and S&P had downgraded the U.S. from AAA to AA+ 12 years ago.
