Consequences of War on the US Economy

Psst…wanna learn something today?

The Institute for Economics and Peace is out with a monumental piece of research on how wars affect the US economy…

Using data from the Bureau of Economic Analysis, figure one shows the composition of U.S. GDP in consumption, investment, government spending and net exports and imports in per-capita terms. It can be seen the war years of 1941 to 1945 saw one of the most significant short term increases in economic growth in the history of the U.S. economy. The top line in blue is GDP, and the increase around World War II is very visible. This was driven by government spending denominated in purple.

The bottom line in their findings is that:

• Public debt and levels of taxation increased during most conflicts;
• Consumption as a percent of GDP decreased during most conflicts;
• Investment as a percent of GDP decreased during most conflicts;
• Inflation increased during or as a direct consequence of these conflicts.

Click below for the whole PDF, they go war by war and offer some amazing stats.

Economic-Consequences-of-War