As of: February 24, 2024, 9:58 a.m
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An American report makes clear the importance of the Ukraine war for the US economy - especially for the defense sector.
Washington/Munich - War instead of peace: While the German economy is suffering from the consequences of the Ukraine war and is now at the bottom of the EU in terms of growth, the situation in the USA is different:
A
Wall Street Journal
report highlights how the confrontation between Russia and the West has given American industry a huge boost.
Arms companies in particular are benefiting from the conflict that has been simmering for more than two years.
US economy: Ukraine war causes defense sector to flourish
Since the escalation in February 2022, there has been a real boom in orders for the defense sector, which has always played a major role for the United States (according to the
NZZ
, the 2024 budget is a whopping $886 billion).
Industrial production in the defense sector (including space programs) grew by an impressive 17.5 percent within two years.
The
WSJ
refers to an evaluation of the domestic central bank system (Federal Reserve).
According to the report, the growth of the domestic defense industry is based on two pillars: There are European allies like Germany, which are modernizing their inventories with billions of investments in US companies Lockheed-Martin, Raytheon and Co.
The US defense sector is benefiting from the war in Ukraine and the arms deliveries to the crisis area.
© Pond5 Images/Imago
USA invests in defense - “important for employment and production”
In addition, the Pentagon in Washington allocates a large portion of the US budget to the defense industry.
Interesting in this context: 60.7 billion US dollars of the 95 billion military package - which according to information includes not only Ukraine but also money for Israel and Taiwan - ends up in the American defense industry.
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With the investments, the company's own stocks will be replenished with new military equipment due to arms deliveries to Ukraine.
Hamburg-born Lael Brainard, director of the National Economic Council in Washington, is quoted in the
Wall Street Journal
: "This is one of the things that is misunderstood... how important these funds are to employment and production across the country."
Germany, for example, is buying new Chinook helicopters worth $8.5 billion.
Poland is renewing its aging helicopter and tank fleet with American military equipment for around $30 billion.
Energy for Europe: USA now largest exporter of LNG gas
And the arms business is likely to continue to flourish in the coming years: on the sidelines of the security conference in Munich it was announced that the Federal Republic may soon spend more than two percent of its budget on defense.
LNG terminal ship: The cards on the international gas market have been reshuffled by the Ukraine war.
© Ralf Ibing/Imago
Meanwhile, the
NY Post
and other US media are reporting on another point that is giving the US economy a boost: After Russian gas deliveries to Germany and other countries were stopped, the United States became the world's largest exporter of LNG gas in 2023.
A full two-thirds of them landed in Europe by ship - according to a forecast by the US Department of Energy, environmentally harmful deliveries could almost double by 2030.
The effect for the “old” continent: The previously cheap energy was massively reduced, resulting in inflation due to the significantly increased costs.
European companies are increasingly drawn to the USA
As a result, what has been hovering over Europe like a sword of Damocles since then is the scenario of deindustrialization: after all, numerous local companies are investing heavily in North American locations.
Many companies from the German automotive sector are also moving overseas.
US politicians and economic experts make no secret of the role of the country, which is plagued by drug problems, as a profiteer: “We know that due to the direct and indirect effects of the war in Ukraine, potential contracts worth tens of billions of dollars are on the table for US companies, but it "It's less clear how quickly companies will receive these funds," said William Hartung, a senior fellow at the Quincy Institute for Responsible Statecraft in Washington.
US economy is growing - but only certain sectors
According to studies, it is European companies in particular that are attracted by the USA's cheap and abundant energy resources, combined with investments by the incumbent government (IRA).
However, by far not the entire population benefits from the flourishing economy as a result of the Ukraine war.
Although defense companies are creating new jobs thanks to increased orders, the positive effect is felt by a comparatively small part of the population, explains Marc Goldwein: “I don't think you can say with certainty that the US economy has become larger as a result of the war is, but certain sectors of the economy are definitely larger,” said the executive director of the Committee for a Responsible Federal Budget.
(PF)