4/10/2006

Defense spending remains the leading source of revenue

Defense spending remains the leading source of revenue for the US industry. The defense budget continually increases the revenue. Leading areospae companies have stopped focusing on commercial business and instead focus on defense outputs because greater profit is made here. Fighting terrorism has casued increased cost in the field of areospae due to new regulations but it has also boosted profits for companies with defense contracts.

3 comments:

Bryce Larkin said...

Companies need to be aware of what will happen when this war is over, or more importantly, when a new president gets into office. Defense spending maybe their revenue now but they better not depend on it forever.

rico said...

Bryce is right. Defense contracts are good for now, but these companies need to be looking into the future as well. These defense contracts give them a good opportunity to work on core competencies and develop a strategy for when the contracts expire.

Dr. Tufte said...

-1 on Will's post for grammatical errors.

-1 on Bryce Larkin's comment for grammatical errors.

There are some practical issues here, as Rico pointed out, but most of this is just hyperbole.

Defense spending is about 5% of GDP. It is not, and cannot be where most funding is coming from. Furthermore, most of that goes to compensation for employees, not back to firms for merchandise.

The unquestioning acceptance of nonsense like this is one of the things that makes teaching economics so hard.