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Defense Spending Analysis and Outlook

By Connor Lokar on April 17, 2024

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Connor Lokar

As a millennial, Connor brings a new perspective to the world of economics, delivering ITR’s industry-leading accuracy to current C-suite executives while forging connections with the next generation of business leaders.

Slowing global growth, elevated interest rates, lingering inflationary pressure, and global conflict are combining in 2024 to yield what we expect will be a slower-growth environment for private sector activity. However, not all markets are the same, and in some cases, markets deviate from the prevailing macroeconomic cycle. In this month’s Business Series Webinar, we will take a look at one such outlier – defense spending.

US Defense Capital Goods New Orders have exhibited a counter-cyclical relationship with the US macroeconomy in recent years. In 2021 and into 2022, New Orders were declining while virtually all markets that positively correlate with the macroeconomy were soaring to new heights as COVID-related shutdowns were lifted and stimulus-supported demand was unleashed.

Then, as those same markets began to cool and normalize in the second half of 2022 and in 2023, we saw defense spending move back into a growth cycle and rise to its current level, which is near all-time highs. This may indicate that geopolitical events, such as the conflict in Ukraine and subsequent US ordnance support, have more impact on defense markets than interest rates or Main Street retail trends.

In this April webinar, we will endeavor to answer key defense-related questions:

  • How have prior periods of geopolitical unrest impacted defense spending?
  • Does the political alignment of the executive and legislative branches in Washington, DC, have an impact on spending?
  • What is the timing relationship between the US defense budget and real-world spending on defense goods?
  • What have been the most aggressively growing categories of defense spending – small arms and ordnance, communications equipment, aircraft, missiles, space vehicles and parts, ships and boats, or search and navigation equipment?

We will explore all of these in this month’s Business Series Webinar.

 

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