ECON’S ‘MOODY’ STATE
Credit rating ‘negative’
Bidenomics was hammered with a one-two punch of bad news Friday.
Moody’s changed its outlook on the US credit rating to “negative” from “stable,” citing large fiscal deficits and a decline in debt affordability.
The decision — shortly after the market closed — came after a key economic study released earlier in the day showed US consumers’ worries over long-term inflation surged to a 12-year high over similar fears.
The move by Moody’s follows a downgrade of the sovereign credit rating by another agency, Fitch, earlier this year, months after political brinkmanship around the US debt ceiling.
“Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” Moody’s said in a statement.
Republicans, who control the House of Representatives, expect to release a stopgap spending measure on Saturday aimed at averting a partial government shutdown by keeping federal agencies open when current funding expires next Friday.
Moody’s decision also comes as President Biden has seen his support fall sharply in the polls ahead of next year’s election.
The national debt has soared to more than $33 trillion, and inflation remains above the Federal Reserve’s 2% target rate despite a series of rate hikes.
“Moody’s just downgraded our credit rating outlook to negative because of our outof-control government spending and deficits,” Republican Rep. Andy Harris of Maryland said on X.
Silver lining
While Moody’s changed its outlook, indicating that a downgrade is possible over the medium term, it affirmed its long-term issuer and senior unsecured ratings at “Aaa,” citing the United States’ credit and economic strengths.
Immediately after the Moody’s release, White House spokesperson Karine Jean-Pierre said the change was “yet another consequence of congressional Republican extremism and dysfunction.”
Average households continue to feel squeezed, according to fresh data from the University of Michigan.
Consumers expect prices to climb at an annual rate of 3.2% over the next five to 10 years — up from 3% the previous month, according to the university’s preliminary November findings, which were obtained by The Post.
Surveyed Americans see costs rising 4.4% during the coming 12 months, up from an expectation of 4.2% a month earlier, according to the report released Friday.