(Bloomberg) -- US federal government spending on national defense surged in the third quarter at the fastest pace in more than two decades, helping propel gross domestic product higher ahead of the November election.
Defense spending rose at a 14.9% annualized rate in the July-September period, the most since the start of the Second Gulf War in 2003, according to figures published Wednesday by the Bureau of Economic Analysis. Overall GDP rose 2.8%.
Wars in Ukraine and the Middle East have led to a sharp upturn in US defense spending in recent years, though economists are skeptical that increases of the magnitude registered in the third quarter will last.
“The Pentagon has been rushing materiel out to Ukraine and Israel after the extensive delay early in the year, when the foreign aid package was held up in Congress for months,” Stephen Stanley, chief US economist at Santander Capital Markets LLC, said in a note. “I look for this sector to normalize going forward.”
The details of the report showed spending on missiles jumped an annualized 26.6%, while outlays on electronics rose 15.8%. Outlays for weapons support services increased at a 25.7% rate, while spending on transportation of materials surged 277%.
Congressional approval in late April of the $95 billion national security supplemental funding bill included money for Ukraine, Israel and allies in the Pacific region. At least $30 billion was slated to go toward munitions and weapons systems. The third quarter is also when the Pentagon does most of its contracting for new programs, or ramps up production for existing ones.
--With assistance from Roxana Tiron.
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