Is defense spending topping out?

The latest read of defense investment shows that real expenditures grew at nearly the slowest annual rate in a decade possibly indicating that defense spending may be entering a period of slowing or contraction.

In nominal terms, national defense consumption expenditures and gross investment was $793.8 billion in Q3 2009, a 113% increase over the same period in 2000, a decade long run of robust defense spending.

Now though, we may be seeing the early signs of a period of an oncoming contraction in defense spending with real expenditures registering only a tepid 2.2% increase on a year-over-year basis.

With the weak domestic economy and some military operations possibly nearing an end-game it will be interesting to watch the trend of this significant component of government spending over the next several years.

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