'Disaster': Internet pounces on Trump as US suffers historic first-ever credit downgrade

16 May

U.S. President Donald Trump attends a cabinet meeting at the White House in Washington, D.C., U.S., April 10, 2025. REUTERS/Nathan Howard

Moody's Investors Service downgraded on Friday the United States government's credit rating from its highest AAA to AA1 for the first time in modern history.

This development comes against the backdrop of concerns over the nation's escalating debt and the government's inability to implement effective fiscal reforms.

Moody's highlighted that despite the downgrade, the U.S. "retains exceptional credit strengths such as the size, resilience and dynamism of its economy and the role of the U.S. dollar as global reserve currency," per the Associated Press.

In a statement released Friday afternoon, Moody's projected that federal deficits would widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024. This increase is attributed to rising interest payments on debt, growing mandatory spending obligations on earned benefits like Social Security and Medicare and relatively low revenue generation.

Moody's has become the third major credit rating agency to lower the U.S. federal government's credit rating, following Standard & Poor's in 2011 and Fitch Ratings in 2023.

The downgrade has had immediate effects on the financial markets, with 10-year Treasury yields climbing from 4.44% to 4.48%, per AP.

However, Moody's also changed its credit outlook for the U.S. from negative to stable, citing strong economic growth potential, the U.S. dollar's global reserve status, and robust national institutions.

Social media users reacted to the news and criticized the Trump administration's economic policies.

Former Treasury Department official Ashley Schapitl wrote on the social platform X: "It’s crazy to do high-end tax cuts in this environment."

Political commentator Chris D. Jackson wrote: "The only major credit agency that hadn’t downgraded us under Trump just did. Who else is enjoying all this 'economic winning' under Trump?"

Economist Joseph Brusuelas wrote: "Years of dysfunction, debt ceiling debacles & fiscal imprudence has brought us to this outcome. Just a useful reminder ahead of another potential debt ceiling disaster later this summer."

Economics analyst Marc Goldwein wrote: "The markets are telling is[sic] to back off -- we don't need another $5 trillion of debt."

Political commentator Jessica Tarlov wrote: "Play stupid games. Win stupid prizes."

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