San Diego Business Journal

Pentagon to Spend $20.6B in Region, Study Says

By Brad Graves Thursday, June 21, 2012

A new study predicts the Pentagon will spend $20.6 billion in San Diego County during fiscal 2012, up slightly more than 1 percent from $20.3 billion in fiscal 2011.

This year’s total breaks down to $9.9 billion in procurement, $8.1 billion in wages and salaries, and $2.6 billion in retirement and benefits.

The study, released June 20, suggests spending could reach $20.7 billion in the 2013 fiscal year, which begins Oct. 1. However, Lynn Reaser, the Point Loma Nazarene University economist who wrote the report, noted that defense spending will come “under considerable pressure” in the years ahead because of the federal budget debate and the end of two wars in the Middle East.

“Defense spending has probably peaked,” Reaser said before a gathering of the San Diego Military Advisory Council, a group that brings military and business leaders together. SDMAC commissions the study every year.

The study says $20.6 billion in Pentagon spending balloons to $32 billion in gross regional product, once ripple effects are considered. Reaser said her team applied a sophisticated economic model to figure out the effects of federal spending.

“For every $1,000 of direct defense-related spending coming into the San Diego region … an additional $550 is generated through the supply chain and consumption dynamics,” the report says.

Copies of the report are available from the San Diego Military Advisory Council, whose website is www.sdmac.org.