After posting exceptional GDP growth this year and next year, the U.S. economy will likely move into a long-term period of growth that’s lower than the average seen prior to the financial crisis, says Moody’s Investors Service.

Growth at that level would still support the U.S.’s current triple-A rating with a stable outlook, but Moody’s says it will make the rating more vulnerable to economic shocks and fiscal policy changes.

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“While the debt metrics could deteriorate due to slower growth, it would not necessarily render the government’s credit profile incompatible with its current rating in the next few years,” says Steven Hess, Moody’s senior vice-president, and author of a new report on U.S. GDP growth.

“Higher debt levels, however, would increase the [country’s] vulnerability to potential shocks in the longer term, putting pressure on the country’s credit profile in the decade of the 2020s.”

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But, despite below-trend growth in first quarter of 2015, Moody’s expects real GDP growth in the U.S. to be around 2.8% in 2015 and 2016, higher than the average 2.1% over the past four years—productivity growth, consumer spending and nonresidential fixed investment are all supporting the current growth.

In 2017 and beyond, growth may slow down because of the aging U.S. population. Hess says, “The relatively more labor-intensive growth model in the U.S. will become increasingly less sustainable going forward, and a slower rise in labor input will be the biggest drag on growth.”

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In the new report, Moody’s details three scenarios for long-term growth over the next fifteen years. Its baseline scenario is for output growth to average 2.3% over the long term, which is significantly lower than the 3.7% growth seen in the period between 1992 and 2007.

Moody’s more conservative forecast is for annual output growth of 1.5% over the next fifteen years, while its optimistic forecast is for growth of 3.2%.

The U.S.’s actual long-term growth rate will be central to its debt-to-GDP ratio, a key measure of its debt burden. So far, Moody’s central scenario calls for the U.S. federal debt-to-GDP ratio to climb during the decade of the 2020s, and for it to reach 87% by 2030.


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