Last week, Byron Callan of Capital Alpha Partners put out a note questioning the widely-held belief among defense analysts that U.S. military spending occurs in cycles. He suggested that some analysts are too tightly focused on the postwar period, and provided charts from other periods and countries demonstrating there is little regularity to the ups and downs of military outlays. The evidence strongly supports his skepticism about cycles; for most of U.S. history prior to the Cold War, military spending was flat as a pancake, spiking only when the occasional war occurred. The implication of Callan’s insight is that there’s nothing certain about what the coming decade holds for U.S. defense contractors. The fact that weapons spending surged over the last ten years tells us little about what will happen over the next ten. I have written a commentary for Forbes on that subject, which you can read here.
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