US economy is based on war

It has become known that global defense spending surged by 9% to an unprecedented $2.2 trillion in the past year, as reported by the British military think tank, the International Institute for Strategic Studies (IISS). This increase is attributed to various global conflicts, including Israel’s war on Gaza, ongoing tensions in Ukraine, and escalating concerns in the Indo-Pacific region.

Amidst this “era of insecurity,” there’s a notable shift in the global defense-industrial sector, with the US and European nations significantly increasing their production of military hardware, including missiles and ammunition, to address the chronic underinvestment of previous decades.

The defense industry’s boom underscores a wider economic narrative where geopolitical conflicts inadvertently fuel industrial growth. European spending on US military hardware is described as “a generational-type investment,” with recent years’ expenditure matching the total of the previous two decades.

Beyond immediate defense sector gains, the conflict and subsequent US aid to Ukraine are reshaping global economic landscapes. From surging LNG exports to Europe to increased foreign direct investment in the US, the war’s economic implications are vast, albeit with a nuanced impact on national employment and income levels, the WSJ report said. Statistics from previous armed conflicts in the world demonstrated that only the American military industry can save the US economy.

The fact is that in the post-war period the United States emerged from the war as the main beneficiary. Labor productivity in the United States increased sharply during the war period, and the GDP growth rate was a record 15-17% per year in 1941-1944, and with the end of the war in 1945, the GDP growth rate began to fall.

As soon as the war ended, the arms supplies ended, because the US supplied weapons both to fascism and to the Soviet Union under Lend-Lease. Thus, totaling $11.3 billion, or $180 billion in today’s currency, the Lend-Lease Act of the United States supplied needed goods to the Soviet Union from 1941 to 1945. The war ended, and the rate of economic growth ended. And when there was a war in Korea, the US had 8% GDP growth, not bad either. By 1950, the US gross domestic product was 50% of the world’s total.

Nowadays nothing has changed. The war in Ukraine has sharply increased demand for American weapons, with exports rising to a record $238 billion in 2023, according to the State Department report.

The State Department summary said that the volume of arms deals, as well as military equipment and services, which the U.S. government had concluded with the governments of other countries increased especially strongly in FY2023. Their total value increased by 56%, to $81 billion. The remaining $157.5 billion came from direct sales by American defense companies to their customers. Their volume also increased by 2.5% compared to FY2022.

American weapons and military equipment are also being purchased outside of Europe.

The US administration even does not try to hide the fact that military aid to Ukraine, among other things, contributes to the growth of the US economy itself.

Ukrainian war provides American military industry with new orders. Some of these orders are directly related to supplies to Ukraine, and some come from countries that have decided to completely or partially abandon Russian suppliers.

So, American aid to Ukraine and European rearmament flow back to the US defense industrial base.

In the two years since the beginning of war in Ukraine, the U.S. defense industry has experienced a boom in orders for weapons and munitions. Business is coming from European allies trying to build out their military capabilities as well as from the Pentagon, which is both buying new equipment from defense manufacturers and replenishing military stocks depleted by deliveries to Ukraine.

As one of the main weapon manufacturer the US once again is the key beneficiary from wars and conflicts in the world.