Status of American military Power

For the entire length of the Obama Administration, the surging power of the Russian and Chinese militaries was largely met with, in defiance of caution, reductions in the U.S. defense budget. Long standing and successful concepts, such as having sufficient forces to meet two challenges simultaneously, were openly abandoned. Following the election of 2016, a more realistic approach returned, but undoing the damage of eight years cannot be accomplished in a short period of time.

The Heritage Foundation has issued its annual Index of U.S. Military Strength .

We present a quick summary of its findings:

“…the U.S. does not have the necessary force to meet a two–major regional contingency requirement and is not ready to carry out its duties effectively. Consequently, as we have seen during the past few years, the U.S. risks seeing its interests increasingly challenged and the world order it has led since World War II undone.

“The Active Component of the U.S. military is two-thirds the size it should be, operates equipment that is older than should be the case, and is burdened by readiness levels that are problematic.

Army as “Marginal.” The Army’s score returned to “marginal” in the 2019 Index, primarily due to an increase in readiness. The Army continues to struggle to rebuild end strength and modernization for improved readiness in some units for current operations, accepting risks in these areas to keep roughly half of its force at acceptable levels of readiness.
Navy as “Marginal.” The Navy’s overall score is the same as in the 2018 Index. The Navy’s emphasis on restoring readiness and increasing its capacity signals that its overall score could improve in the near future if needed levels of funding are sustained. The Navy’s decision to defer maintenance has kept ships at sea but also has affected the Navy’s ability to deploy, and the service has little ability to surge to meet wartime demands. The Navy remained just able to meet operational requirements in 2018.
Air Force as “Marginal.” This score has trended downward over the past few years largely because of a drop in “capacity” that has not effectively changed and a readiness score of “weak.” Shortages of pilots and flying time have degraded the ability of the Air Force to generate the air power that would be needed to meet wartime requirements.
Marine Corps as “Weak.” The Corps continues to deal with readiness challenges driven by the combination of high operational tempo and the lingering effects of procurement delays. The Marine Corps has cited modernization of its aviation platforms as the single most effective means to increase readiness within the service. Marine operating forces as a whole continue to average a two-to-one deployment-to-dwell ratio, consuming readiness as quickly as it is built and leaving minimal flexibility to respond to contingencies.
Nuclear Capabilities as “Marginal.” The U.S. nuclear complex is “trending toward strong,” but this assumes that the U.S. maintains its commitment to modernization and allocates needed resources accordingly. Although a bipartisan commitment has led to continued progress on U.S. nuclear forces modernization and warhead sustainment, these programs remain threatened by potential future fiscal uncertainties, as are the infrastructure, testing regime, and manpower pool on which the nuclear enterprise depends.

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“In the aggregate, the United States’ military posture is rated “marginal.” … the current U.S. military force is likely capable of [only] meeting the demands of a single major regional conflict while also attending to various presence and engagement activities but that it would be very hard-pressed to do more and certainly would be ill-equipped to handle two nearly simultaneous major regional contingencies.

“The military services have continued to prioritize readiness for current operations by shifting funding to deployed or soon-to-deploy units while sacrificing the ability to keep non-deployed units in “ready” condition; delaying, reducing, extending, or canceling modernization programs; and sustaining the reduction in size and number of military units. While Congress and the new Administration took positive steps to stabilize funding for 2018 and 2019 through the Bipartisan Budget Agreement of 2018, they have not overturned the Budget Control Act that otherwise caps defense spending and that, absent additional legislative action, will reassert its damaging effects in 2020. Without a real commitment to increases in modernization, capacity, and readiness accounts over the next few years, a significant positive turn in the threat environment, or a reassessment of core U.S. security interests, America’s military branches will continue to be strained to meet the missions they are called upon to fulfill.”

Photo: The Arleigh Burke-class guided missile destroyer USS Hopper (DDG 70), equipped with the Aegis integrated weapons system, launches a RIM-161 Standard Missile (SM) 3 Block IA.DoD photo courtesy of U.S. Navy/Released

Quick Analysis

Federal Reserve Report on the Economy

The Beige Book is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered directly from each District’s sources. The latest edition has just been released. We present key portions of the summary here. Overall Economic Activity Overall economic activity expanded slightly, on balance, since late February. Ten out of twelve Districts experienced either slight or modest economic growth—up from eight in the previous report, while the other two reported no changes in activity. Consumer spending barely increased overall, but reports were quite mixed across Districts and spending categories. Several reports mentioned weakness in discretionary spending, as consumers’ price sensitivity remained elevated. Auto spending was buoyed notably in some Districts by improved inventories and dealer incentives, but sales remained sluggish in other Districts. Tourism activity increased modestly, on average, but reports varied widely. Manufacturing activity declined slightly, as only three Districts reported growth in that sector. Contacts reported slight increases in nonfinancial services activity, on average, and bank lending was roughly flat overall. Residential construction increased a little, on average, and home sales strengthened in most Districts. In contrast, nonresidential construction was flat, and commercial real estate leasing fell slightly. The economic outlook among contacts was cautiously optimistic, on balance. Labor Markets Employment rose at a slight pace overall, with nine Districts reporting very slow to modest increases, and the remaining three Districts reporting no changes in employment. Most Districts noted increases in labor supply and in the quality of job applicants. Several Districts reported improved retention of employees, and others pointed to staff reductions at some firms. Despite the improvements in labor supply, many Districts described persistent shortages of qualified applicants for certain positions, including machinists, trades workers, and hospitality workers. Wages grew at a moderate pace in eight Districts, with the remaining four noting only slight to modest wage increases. Multiple Districts said that annual wage growth rates had recently returned to their historical averages. On balance, contacts expected that labor demand and supply would remain relatively stable, with modest further job gains and continued moderation of wage growth back to pre-pandemic levels. Prices Price increases were modest, on average, running at about the same pace as in the last report. Disruptions in the Red Sea and the collapse of Baltimore’s Key Bridge caused some shipping delays but so far did not lead to widespread price increases. Movements in raw materials prices were mixed, but six Districts noted moderate increases in energy prices. Contacts in several Districts reported sharp increases in insurance rates, for both businesses and homeowners. Another frequent comment was that firms’ ability to pass cost increases on to consumers had weakened considerably in recent months, resulting in smaller profit margins. Inflation also caused strain at nonprofit entities, resulting in service reductions in some cases. On balance, contacts expected that inflation would hold steady at a slow pace moving forward. At the same time, contacts in a few Districts—mostly manufacturers—perceived upside risks to near-term inflation in both input prices and output prices. Highlights by Federal Reserve District Boston Business activity expanded at a modest pace in recent weeks, and prices rose slightly. Employment was flat overall, but one retailer reported significant layoffs. Convention and tourism activity grew at a robust pace. Home sales increased on a year-over-year basis, marking a turnaround. The outlook ranged from cautiously optimistic to bullish. New York On balance, regional economic activity remained flat. Labor market conditions were solid and continued to normalize as labor supply and labor demand came into better balance. Consumer spending was unchanged after a weak first quarter. Housing markets strengthened, with the spring selling season picking up beyond the seasonal norm. The pace of selling price increases remained modest. Philadelphia On balance, business activity was flat in the current Beige Book period—after declining slightly last period. Employment edged up, despite staffing and recruitment efforts slowing to a crawl. Wage and price inflation continue to moderate; however, housing affordability continues to be a concern. Overall, the outlook is positive, as firms remained optimistic about expectations for future growth. Cleveland District business activity increased modestly, as did employment. Firms anticipated greater ease filling open positions, including those that have been particularly challenging, because of increased labor availability. Wage pressures continued to normalize, and some contacts reduced starting wages for new roles. Cost and price pressures changed little. Richmond The regional economy grew at slight pace since our previous report. Consumer spending on retail goods was mixed but spending on travel and tourism was up slightly. Fifth District port activity slowed and was impacted by the collapse of the Francis Scott Key Bridge. Employment growth slowed from a moderate to a modest rate in recent weeks, but wages continued to grow moderately. Price growth also remained moderate. Atlanta The Sixth District economy grew modestly. Labor markets continued to stabilize; wage pressures eased. Many nonlabor costs moderated. Retail sales were steady, but consumers remained price conscious. Tourism remained robust. Commercial real estate conditions slowed. Transportation activity was mixed. Manufacturing grew slightly. Loan demand was flat. Energy activity improved. Chicago Economic activity increased slightly. Employment increased modestly; business and consumer spending rose slightly; nonbusiness contacts saw no change in activity; and manufacturing and construction and real estate activity were flat. Prices and wages rose moderately, while financial conditions were stable. Prospects for 2024 farm income were unchanged. St. Louis Economic activity has continued to increase slightly since our previous report. Prices have increased modestly, as contacts are broadly feeling the pressures of increases in both labor and non-labor costs. The outlook was neutral to slightly optimistic, which is generally unchanged from our previous report, but better than one year ago. Minneapolis District economic activity grew slightly. Employment grew some, but labor demand was softer. Wage pressures were present but continued to ease, while price pressures ticked up. Consumer spending was mostly flat, and manufacturing slowed modestly. Commercial and residential construction improved […]