HousingWire Daily Logan Mohtashami on US debt levels and the Moody’s downgrade
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May 20, 2025 
Logan Mohtashami, a leading analyst known for his sharp insights into the housing market, joins the conversation about the recent Moody’s downgrade of U.S. debt. He argues that debt levels shouldn't alarm us, framing downgrades as warnings rather than crises. The discussion navigates the complexities of mortgage spreads and their impact on housing data, debunking myths about debt and rising mortgage rates. Mohtashami emphasizes economic resilience, offering a refreshing perspective amid prevailing fears.
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Moody's Downgrade is Largely Symbolic
- The Moody's downgrade of US debt has little practical impact on mortgage rates and the economy.\n- Past downgrades in 2011 and 2023 similarly did not worsen bond yields or debt conditions.
US Debt Is Manageable and Sustainable
- The US benefits from a strong dollar and investor confidence, making debt crisis unlikely.\n- Even with $37 trillion debt and unfunded liabilities, the US maintains low interest rates and economic power.
Budget Realities Limit Debt Cuts
- The US budget primarily consists of mandatory spending like Medicare and Social Security, making cuts politically difficult.\n- Debt growth reflects aging population and slowing growth, similar to mature economies like Japan.