A new world must prepare for a new presidency.
President-elect Donald Trump has yet to be sworn into office, but he’s already having an effect on some sectors. As Trump prepares to take office, major defense firms are anticipating a surge in defense spending.
Effects of the Election on Defense Firms
Actually, defense firms were expecting an uptick in business even if Hillary Rodham Clinton had won the election. Signs such as solid third-quarter earnings for Northrop Grumman were seen as predictors of healthy defense spending.
While the stock market initially suffered a sharp drop immediately following Trump’s victory, it quickly rebounded to post a record high of 18,808. Gains by defense contractors such as Northrop Grumman, Lockheed Martin, and Boeing led the rally.
Positive Signs Pointing to Increased Defense Spending
Factors behind this surge in optimism include:
• The 2013 budget sequestration implemented significant cuts in military spending. Analysts expect the Republican administration and Republican-controlled House and Senate to work together on eliminating these financial caps.
• During his campaign, Trump vowed to make significant additions to all military branches and argued for fast-track modernization of the country’s nuclear force. At this point, however, there is no specific outline as to how the spending will be funded.
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