The county government seems to be weathering the storm.

Bond-rating agency Moody’s has maintained Montgomery County’s AAA rating, even after it downgraded its assessments for the state of Maryland and Washington, D.C., earlier this year.

Top Maryland Democrats were harshly critical of Moody’s after it lowered the state’s rating in May for the first time since 1973. Then the two other major rating agencies, S&P and Fitch, upheld the state’s AAA ratings.

The AAA rating, the highest possible, ensures that Montgomery County will pay lower interest rates when it issues bonds to borrow money to pay for large government projects, like constructing school buildings.

Moody’s analysts said in their assessment that the rating “reflects the likelihood that the county’s local economy will continue to expand,” despite its exposure to the federal government.

The analysts noted that while Montgomery County is home to large federal agencies, including the Department of Health and Human Services and the Department of Defense, and a large population of commuters to D.C., the county’s private sector has continued to grow, helping to offset revenue declines from thousands of federal government and contracting job losses.

Moody’s also cited the county’s wealth as a stabilizer.

Warning signs

While Moody’s analysts concluded the county’s outlook remains stable, they also pointed to underlying uncertainties and cautioned that the county’s credit could take a hit if the local economy severely contracts because of federal policy changes.

Moody’s economists and others who study the region were already pointing to warning signs.

Mark Zandi, chief economist for Moody’s Analytics and an economic adviser to Maryland lawmakers and officials, has repeatedly posted on social media that Maryland and D.C. are among a growing number of areas either in or at a high risk of recession.

His analyses have shown that the states in or nearing decline are spread across the country, but he has also said that local economies in the capital region are at particular risk because of government job cuts under President Donald Trump.

Even before the start of the federal shutdown, researchers at the D.C.-based Brookings Institution said the county was the “center of gravity” for regional economic troubles.

They warned that a shutdown, potentially putting tens of thousands of employees out of work, would only compound problems.

But like Moody’s, some local officials contend that Montgomery County’s large population of wealthy residents could help it withstand broader economic peril in the region.

While the county constitutes about 17% of the state’s population, in 2023 it was home to 29% of filers with at least $200,000 in taxable income and 39% of those reporting at least $500,000.

Richard Madaleno, the county’s chief administrative officer, said in an interview in September that these wealthy people’s incomes aren’t compromised by the dramatic changes in federal policy.

“They, in fact, are making more money than ever before. And that’s flowing into the state of Maryland and into Montgomery County,” he said at the time.