US faces threat of rating downgrade as Moody’s lowers outlook; 2 reasons why

News Snapshot:

The US was threatened with the loss of its last top credit rating on Friday, as Moody’s Investors Service signaled it was inclined to downgrade the nation because of wider budget deficits and political polarization. The rating assessor lowered the outlook from stable while affirming the nation’s rating at Aaa, the highest investment-grade notch. Amid higher interest rates, without measures to reduce spending or boost revenue, fiscal deficits will likely “remain very large, significantly weakening debt affordability," Moody’s said. “Interest rates have shifted materially and structurally higher," William Foster, a senior credit officer at Moody’s, said in an interview. “This...