Saturday, August 1, 2009

Why a Recovery May Still Feel Like a Recession?

The United States remains primarily a civilian economy. The military now takes about 8 percent of all durable goods, up from 3 percent in 2000.

One area where that can be seen is shipments of durable goods produced by American companies. The rate of such shipments fell by more than 20 percent during this recession, and would have declined further were it not for increased production of weapons.

In no previous downturn since 1958, when the figures began being recorded, had the decline been as much as 14 percent.

The drop is all the more remarkable because such shipments rose at a relatively restrained rate in the preceding period of economic growth, particularly when military sales were excluded.
The accompanying charts show the trend in durable goods spending, for military purposes and for other shipments of durable goods, from 2000 through this June. In June, seasonally adjusted shipments for civilian purposes were 19 percent below the average monthly figure for 2000. Shipments of military items were running 123 percent above the 2000 average.

Full Article.