How War In Europe Boosts US Economy

Proponents of support for Ukraine usually invoke US strategic interests or moral obligations. Lately, they are making a more calculating case: It is good for the economy.

- Tom Fairless

In the two years since Russia invaded Ukraine, the US defense industry STR 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.

Industrial production in the US defense and space sector has increased 17.5% since Russia launched its full-scale invasion of Ukraine two years ago, according to Federal Reserve data.

Biden administration officials say that of the $60.7 billion earmarked for Ukraine in a $95 billion supplemental defense bill, 64% will actually flow back to the US defense industrial base.

"That's one of the things that is misunderstood...how important that funding is for employment and production around the country," Lael Brainard, director of the White House National Economic Council, said in an interview

Wednesday. While war often has economic spin-offs, these are occurring without the US actually doing any of the fighting.

Recent spending by European governments on US jet fighters and other military hardware represents "a generational-type investment. The past few years are equal to the prior 20 years," said Myles Walton, a military industry analyst at Wolfe Research.

While the $95 billion aid package, which also includes funds for Israel and Taiwan, passed the Senate on 13 February, its fate is uncertain in the House, where it is opposed by Republican allies of former President Donald Trump front-runner for the GOP presidential nomination.

Among their objections: The US can't afford to support Kyiv as federal deficits mount, Russia would prevail anyway, and the US needs to better secure its own border before providing more aid overseas.