Monday, March 27, 2023

US Economy, GDP and Exports

I had an enlightening conversation the other day in which it was claimed that 80% of US GDP was arms sales and the remaining 20% was pharmaceuticals.  While this gross estimation warranted fact checking, I did not have the numbers top of mind as I would have 10 years ago.

Per the Bureau of Economic Analysis, 2022 GDP increased to $26.15 trillion.

Per the balance ( using 2019 GDP numbers of  $19.07 trillion
$13.28 personal consumption ($4.76 goods and $8.56 services)
$3.42 business investment ($0.59 residential)
$0.95 net exports ($3.49 imports, $2.53 exports)
$3.30 government spending ($0.77 defense)

Exports of $2.5 trillion could be broken out as
$547 billion capital goods (planes, robotics, semiconductors)
$531 billion industrial goods (oil, oil derivatives, chemical)
$206 billion consumer goods (pharmaceuticals, cell phones, diamond gemstones)
$162 billion automotive
$131 billion foods, feeds and beverages (corn, soybeans, pork)

Per Reuters, exports of US military equipment to foreign governments was up 49% to $205.6 billion in 2022.

Per Trading Economics, exports of pharmaceutical products was $83.49 billion during 2022. 

Even given the incorrect assertion that GDP is strictly defined as exports only.  Arms and Pharma make up just over 10% of the $2.5 trillion in exports.  Arms at over $200 billion certainly eclipses all other sectors including oil, cars and agriculture.  It is certainly an industry that the US Government has a vested interest in protecting by maintaining good foreign relations and cutting edge technology.

The $718 billion in 2021 military spending.
40% Operation and Maintenance
24% Personnel
20% Procurement
15% Research, Development, Test & Evaluation

This does not count $234 billion spent on veterans benefits.

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