Moody's, a credit rating agency, issued a stern warning about the potential negative consequences of a U.S. government shutdown
Fitch had recently downgraded the U.S. credit rating by one notch due to concerns related to the debt ceiling crisis
Failure to secure funding for the fiscal year starting October 1 could result in disruptions to U.S. government services and leave hundreds of thousands of federal workers furloughed without pay
Political polarization in Washington is viewed as a significant factor weakening fiscal policymaking, especially with rising pressures on U.S. government debt affordability due to higher interest rates
Moody's analyst William Foster emphasized the need for an effective fiscal policy response to offset these pressures, or there could be a negative impact on the country's credit profile, potentially leading to a downgrade
Moody's currently rates the U.S. government with the highest creditworthiness, "Aaa," and a stable outlook
Fitch had downgraded the U.S. government's credit rating to AA+ in August, aligning it with S&P Global's rating assigned in 2011
Moody's stated that fiscal policymaking in the U.S. is less robust compared to many other Aaa-rated peers, and another government shutdown would underscore this weakness
Lael Brainard, President Joe Biden's top economic adviser, emphasized the risks associated with a Republican-led shutdown and called it reckless
While a shutdown's economic impact may be limited and short-lived, it could have more significant consequences the longer it lasts, primarily through reduced government spending
However, government debt payments would not be affected, as was the case during the recent debt limit crisis