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Economic Commentary

Military Spending and the Economic Outlook

The United States is embarking on an unprecedented increase. in peacetime military spending. The program has prompted heated discussions about the implications of defense spending for real output, employment, and prices. Many economists expect the defense buildup to have a relatively small, yet significant, impact on real aggregate economic activity and price levels over the next few years. Nevertheless, the direct impact of increased military spending on some sectors, such as durable goods, and specific prices should be of much greater significance.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Bryan, Michael F., and Owen F. Humpage. 1981. “Military Spending and the Economic Outlook.” Federal Reserve Bank of Cleveland, Economic Commentary 7/27/1981.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International