More on Defense Spending

In my last post on the 08Q3 GDP release, I noted the remarkable contribution of defense spending. Here is a little more detail on the growth rates of defense spending on goods and services on a NIPA basis.

defense1.gifFigure 1: Defense spending (blue), defense consumption spending (red) and defense investment spending (green), in billions of Ch.00$, SAAR. NBER defined recession dates shaded gray. Source: BEA, GDP advance release of 30 October 2008, and NBER.defense2.gifFigure 2: Four quarter growth rates in defense spending (blue), defense consumption spending (red) and defense investment spending (green), in billions of Ch.00$, SAAR, calculated as four quarter log differences. NBER defined recession dates shaded gray. Source: BEA, GDP advance release of 30 October 2008, and NBER.This last graph indicates that as of 2008Q3, total defense spending is rising (in real terms, on an annualized basis) by 7.5%; defense consumption spending is rising by 6.3% (this category includes wages for military and civilian personnel, intermediate goods including ammunition, fuel, supplies, etc.); and defense investment (including structures, aircraft, vehicles, ships, other equipment and software) by 15.5%. The 2008Q3 observation is 1.67 standard deviations above the mean y/y growth rate over the 1990-08 period.Military Keynesianism? I’ll let others speculate; I just think it’s interesting.


Originally published at Econbrowser and reproduced here with the author’s permission.

One Response to "More on Defense Spending"

  1. Guest   November 7, 2008 at 9:44 am

    Defense? War in Agfhanistan, War in Iraq, incipient War in Pakistan, threatened War in Iran, attacks on Syria, arming Georgia to the teeth so that it adopts the Madeleine Albright mantra,”What good are all these weapons if we can’t use them?”.At least have the balls to call it what it is …not defense, not the military industrial complex … but the most ambitious, fiscally unrestrained War Machine ever assembled in the history of the planet.This is mankind nailed to an iron cross…enjoy the Warfare State’s profits, enjoy your comic-book adolescent feeling of invincibility and self-righteous preening, but spare me the Orwellian, cowardly “Defense” rubric. It’s nauseating.