Moody's downgraded the U.S. credit rating from Aaa to Aa1, marking the third downgrade by major agencies in recent years. While there was little reaction in the stock market, the downgrade could impact Americans financially. Higher perceived credit risk typically results in increased interest rates for creditors, which can trickle down to consumers, driving inflation and complicating personal finance. Moody's cited the unsustainable fiscal path of the U.S. government, which has accumulated significant debt, currently at $36.22 trillion, as a primary reason for this decision.
The downgrade, reflecting the U.S. government's unsustainable fiscal path, signifies increased government debt and interest ratios, which may lead to higher interest rates for consumers.
A perceived increase in credit risk means creditors will demand higher rates, potentially causing a rise in inflation and making it harder for individuals to build financial stability.
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