The defense spending boom has begun.
This new Macro Watch video explains why US defense spending is likely to rise significantly in the years ahead — and why that could create enormous investment opportunities.
This is the first video in a new multi-part Macro Watch series examining how strategic competition with China, the AI arms race, semiconductors, global rearmament, and military reindustrialization are beginning to reshape the world economy.
The United States already spends nearly $1 trillion a year on defense. But as a percentage of GDP, US military spending remains far below the levels reached during the Korean War, the Vietnam War, and the Cold War. That means defense spending has room to rise much further if geopolitical tensions continue to intensify.
President Trump has proposed increasing US defense spending to $1.5 trillion next year. That would represent a profound shift in US national priorities and strategic planning.
Meanwhile, the wars in Ukraine and Iran are demonstrating that modern conflicts require not only massive industrial output and larger weapons stockpiles, but also drones, artificial intelligence, advanced surveillance systems, semiconductors, and strategic compute capacity.
This video also shows why the defense spending boom will extend far beyond traditional defense contractors. Big Tech is already investing on a scale that rivals — and in some cases far exceeds — major categories of Pentagon spending.
The investment implications could be enormous.
This new era of global rearmament, technological rivalry, and strategic industrial investment is likely to affect defense companies, Silicon Valley, semiconductors, energy infrastructure, capital flows, inflation, interest rates, and financial markets for many years to come.
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