Tighter defense budgets are starting to pinch the nation's economy, slowing a sluggish recovery even before sharper spending cuts could kick in next year.
Military defense spending fell by about $12 billion, or 3%, from October through May compared with the same period in the previous federal budget year, according to the Congressional Budget Office.
The Bureau of Economic Analysis, which measures defense-related spending more broadly, said last week that weaker defense spending shaved half a percentage point off first-quarter growth. Instead of growing 2.4%, the economy grew 1.9%.
Already, defense contractors are feeling the effects. Lockheed Martin CEO Robert Stevens said recently that his company's workforce is 18% smaller than three years ago, and "the pace of our hiring has slowed considerably."
Much more cutting is in the pipeline. Read more......