The US Senate moves forward, with a 42-17 vote on Wednesday 9/1/2021 to add $25 billion to the 2022 Defense Budget.
This brings total spending by the Pentagon to $740 billion, up from the initial $715 billion.
Several events and indicators have been influencing US decision makers.
With the US withdrawing from Afghanistan, congressional decision makers need to start thinking about what the future holds.
The big question is this – how should the country handle national security?
The US is also taking into account political adversaries such as China – they are rapidly growing in terms of their economic and even military capabilities.
February 21, 2024How Much Has President Joe Biden Requested For The Defense Budget of 2022?
President Joe Biden has requested $715 billion for the defense budget for the year of 2022.
The $715 billion to be used by the Pentagon will fund weapons programs and national security needs, with a portion of the budget to be allocated to defense related programs at the Department of Energy.
The budget would buy military aircraft and would be used to pay for the salaries and raises of the respective military members and civilians.
Further digging shows that these raises will come to about 2.7%.
However!
How Much Is The US Senate Proposing to Increase The Defense Budget By?
With recent events, the US Senate has endured an increase in the military budget of $25 billions, upping the total to $740 billion.
This move even has Bi-Partisan support Democratic backing as through a 42-17 vote.
Intuitively, it can be seen that a Democratic Presidential Administration would not seem as focused on military spending.
But!
The above reading shows that in light of recent events, the US needs to focus on defense.
How Did Companies Such As Defense Contractors React To This News?
You would think this is bullish news, especially for companies like Northrop Grumman, Raytheon, Boeing, Lockheed Martin, and so on.
Major Defense Contractors Performance – 5 Days:
Major Defense Contractors Company Performance – Year To Date:
Regarding short term activity (5D), there is not much going on.
We will continue to monitor the performance of the company relative to policy regarding Defense spending.
In the near future, we can foresee more contracts for military aircraft, unmanned aerial vehicles, radar, satellites, stealth technology, and so on.
Brief Macro Look Between US and China:
Let’s take a brief macro look, comparing US and China, using GDP as a metric:
Definition of GDP – GDP (Gross Domestic Product) of a nation is a rough estimate of all the goods and services that have been produced in a timeframe.
That timeframe can be a fiscal quarter or a year.
Some may argue that GDP is not an accurate way of calculating how well a nation is doing, but it is a good tool to use to compare between countries, provided that we calculate using the same metrics.
We can calculate GDP by adding the money spent by consumers, businesses, and government in a specific time frame.
We can then compare results, and ultimately ask, did the nation grow, relative to another nation?
If we use this metric as described above, it then starts to make sense.
GDP Growth (Annual %) – China vs United States
If you look at the graph above, it should be a no brainer that China is growing at a faster rate than the US!
The above merely shows the rate of change in GDP in terms of percentage, and not the amount in terms of GDP.
Even out the playing field and calculating the rate of change…we see that China is growing fast and can be a threat.
Similarly, the US needs to be prepared for any threats arising from countries like Russia, Iran, and North Korea.
US Vs China Defense Budget
Let’s compare the defense budget between US and China.
U.S. Military Spending/Defense Budget 1960-2021
China Military Spending/Defense Budget 1989-2021
Source – https://www.macrotrends.net
Looking at 2019 data, the US spent about $649 billion, whereas China has spent $261 billion.
The US, by far, is a much bigger spender, but we can see that China is beginning to catch up.
How Does This Impact You?
As a job seeker in Defense, this is good news for you!
An increase in the Defense Budget will lead to:
- Funding for new and existing military programs
- Opportunities for employment
- Better job outlook at the supply chain level
You can see a general increase in the amount of $USD in billions up until 2010s.
Employers in defense firms will recall that during this period, times were slow, and employers were cutting back on costs.
When the budget gets tight, defense contractors start hurting.
They look for ways to cut costs, improve efficiency, and reduce dead weight.
They start to micromanage because they generally seem to have more of a traditional mindset when it comes to working.
But with more funding for defense, more contracts, and the development of new programs, this is positive outlook for defense contractors.
If you’re a student:
Start searching for internships and pad up your resume as much as you can – projects, memberships, solid grades are a few examples of what you need to achieve.
Book a resume review, rewrite, or a mock interview with me to sharpen up your job searching skills.
If you’re currently working in the industry:
Start seeking other opportunities!
Maybe there is something better for you than where you’re currently at.
If you’re trying to break into the defense industry, now is as good as time as any!
About the author
Kazuyoshi Fujimoto, PE
Founder | Engineering Career Coach | Principal Mechanical Engineer
Kazu oversees all of ultmeche’s engineering services. He provides consulting such as resume reviews, rewrites, mock interviews, and all services career related. Additionally, Kazu performs consulting work regarding Oil & Gas, Automotive, and Aerospace & Defense. Kazu is licensed as a professional engineer in the state of California and has 9+ years of experience in Oil & Gas, Automotive, and Aerospace & Defense.
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