Credit firm Moody’s downgraded the nation’s score Friday, reporting that it appears increasingly unlikely that the U.S. economy will be able to keep up with its rising debt and interest payments, rattling what was once an unshakeable confidence in U.S. growth.
“Yesterday felt like we were somewhere along the line of a ‘death by a thousand cuts’ with regards to the U.S. fiscal situation,” Deutsche Bank’s Jim Reid wrote in a note obtained by Fortune Tuesday. “Hard to know where in that thousand we are but probably much nearer a thousand than at zero even as yesterday saw an initial sell-off reverse as the session went on.”
Ratings from Moody’s and other firms inform companies and groups both foreign and domestic regarding how much they need to pay in order to borrow money.
America’s national debt is currently more than $36.8 trillion, as of the time of publishing.
“I do want to assure everyone that the deficit is a very significant concern for this administration,” top White House economist Stephen Miran told reporters Monday. “We’re determined to bring it down and to undo the damage to the fiscal health of the United States that was wrought by the Biden administration and its reckless policies.”
Trump enacted his sweeping tariff plan in order to offset the jaw-droppingly expensive extension to his 2017 tax cuts, but America has yet to see any gains from the economic agenda. Instead, the tariffs have destabilized American markets while simultaneously undermining U.S. dominance in the global economy.
“The government deficit isn’t a problem until investors think it is,” Callie Cox, chief market strategist at Ritholtz Wealth Management, told Axios Monday. “And they’re increasingly telling us that the deficit is a problem.”
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