United States Received Downgrade to Aa1

Earlier today, Moody's announced that they were downgrading the credit rating of the United States to Aa1 from AAA.

The reason for the downgrade? Moody's feels as though the "persistent" deficits in the United States will continue to widen in the coming years, and that the overall debt position of the United States compares negatively to other AAA-rated countries.

This credit rating downgrade doesn't mean much in the grand scheme of things, though it is an embarrassing development for the United States.

After the downgrade of the United States, there are just 11 nations in the world that have a AAA credit rating from Moody's. They are:

Australia
Canada
Denmark
Germany
Luxembourg
Netherlands
New Zealand
Norway
Singapore
Sweden
Switzerland

All of these countries have stable outlooks from Moody's, meaning that they are currently not in any danger of being downgraded.

In order to achieve the AAA credit rating at Moody's, countries must have high household income levels, economic diversity and a strong fiscal position.

Some may raise their eyebrows that a country like Canada still maintains their AAA rating, though their debt-to-GDP and deficit-to-GDP ratios are much stronger than the United States.

There are currently three countries - the United States, Austria and Finland - that have Aa1 ratings with Moody's. All three currently have "stable" ratings, meaning that upgrades or downgrades aren't expected anytime soon.

Filed under: General Knowledge