America is firing faster than it can build

DENYING a munitions shortage is a convenient way of avoiding the harder question of how long the country's arsenal can last. Threatening leakers with jail is a convenient way of avoiding the question altogether. Both tactics came together last week, when President Trump insisted that America has "far more munitions than anyone in the world, and far more than we need", while his officials warned that Pentagon insiders who disclosed interceptor shortfalls "deserve to be in jail". The denials do not change the arithmetic of war.

The surface story is political theatre. The real story is structural. America's defence industry was optimised for short, high-tech conflicts, in which precision substitutes for volume. The war with Iran, which began in February, has turned out to be neither short nor light. According to analysts at the Center for Strategic and International Studies (CSIS), a Washington think tank, the 39-day initial campaign depleted more than half of available stockpiles for at least four of the seven most critical munitions, including Tomahawk cruise missiles, Terminal High Altitude Area Defence (THAAD) interceptors, and Patriot anti-missile interceptors, with other munitions also heavily depleted. A report published on August 4th by CNBC added that the U.S. Army has used "virtually all" of its stockpile of ATACMS and Precision Strike Missiles, the long-range, surface-to-surface weapons that allow strikes from a safe distance. The administration's claim that stockpiles are adequate is true only in the narrowest sense: there is enough to sustain current operations in the Middle East. The question is what happens if another crisis opens elsewhere.

That is the question the denials are designed to sidestep. CSIS analysts Mark Cancian and Chris Park estimate that at least 1,500 Patriot interceptors have been expended since the war began, leaving fewer than 1,000 in inventory. THAAD interceptors are in even shorter supply. Rebuilding will take years, not months. Tomahawk, THAAD and Patriot will each take three or more years at current production rates to return to pre-war levels. Tomahawk procurement averaged just 86 missiles a year in the past decade; even with Raytheon's goal of over 1,000 annually, the current production rate is under 200. A Navy request for 785 Tomahawks in the fiscal 2027 budget will not see deliveries until March 2030. Defence Secretary Pete Hegseth has conceded that replenishment will take "months and years... depending on the weapon system".

To be sure, the industrial base is not standing still. The Pentagon first announced its aim of putting the defence sector on a "wartime footing" in November 2025, and some progress is visible. A CSIS report in July noted that munitions contract obligations have risen 330% since fiscal 2010, roughly 10,000 new firms have entered the market in two years, and government investment in rare-earth supply chains has increased 321% in the past 16 months compared with the previous four years. RTX, which makes Patriot interceptors, Tomahawk missiles and Standard Missile variants, entered five landmark multiyear framework agreements with the Pentagon in February and is investing $3.1 billion in capital expansion this year. Its backlog stands at $271 billion. Lockheed Martin, which produces ATACMS, Precision Strike Missiles and THAAD, has signed similar long-term arrangements. The administration's proposed fiscal 2027 defence budget of $1.5 trillion, a significant increase, reflects these pressures.

Yet investment announcements are not the same as inventory. The CSIS July report, despite noting "trends moving in the right direction", cautioned that manufacturing lead times for critical munitions remain measured in years rather than months, and that lower-cost alternative munitions are not yet in production. The problem is a familiar one in industrial policy: you can order a factory today, but the factory, the supply chains and the trained workforce take time to materialise. Patriot interceptor production is approximately 740 units annually, with plans to increase to 1,100 by 2027. That sounds impressive until one recalls that Iran's earlier coordinated strikes on Israel consumed 15 to 20% of America's global THAAD stockpile in 11 days.

The deeper mechanism at work is not a failure of will but a failure of imagination. For three decades, Pentagon planners operated on the assumption that future wars would be brief, technology-dependent affairs decided by superior sensors and targeted strikes. The logic was seductive and, within its narrow parameters, correct: precision weapons could eliminate targets with unprecedented efficiency. But it assumed that adversaries would accommodate American preferences for short wars. Instead, the conflicts America faces are characterised by sustained consumption of munitions at rates that would have seemed fantastical to planners just a few years ago. As the FPRI, a foreign-policy think tank, put it: "The side with more ammunition often wins."

For investors, the question is whether the defence contractors capturing the rebuilding bonanza are priced for it already. RTX trades at a forward price-to-earnings multiple of about 26.7 times, against Lockheed Martin's 17 times. RTX's Raytheon division saw munitions output grow over 40% year over year in the first quarter of 2026, with operating margins expanding by 150 basis points to 12.2%. The company guided to adjusted sales of $92 billion to $93 billion for 2026, up 5-6% organically, with free cash flow of $8.25 billion to $8.75 billion. The numbers are strong. But a $271 billion backlog and five-year contracts are not the same as near-term margin inflection. Tariffs alone pose an estimated $850 million headwind to operating profit, excluded from guidance. The valuation gap between RTX and Lockheed partly reflects RTX's commercial-aerospace exposure, which offers growth but also cyclical vulnerability. The premium is defensible only if the defence-supply rebuild is as sustained and as margin-accretive as the multiyear contracts suggest.

The political economy of the problem is worth noting. By refusing to release updated inventory figures, citing national security, the White House has insulated itself from the political cost of acknowledging depletion. The result is that allies, who also depend on American air-defence systems, are left in the dark about how much interceptor supply remains available for them. President Zelensky's disclosure that anti-drone weapons promised to Ukraine were diverted to the Middle East was an unintended illustration of the zero-sum nature of the predicament. The rebuilding programme will create a multi-year allocation problem: who gets the new production first, the American military, European partners, or Gulf states whose own interceptor stocks are similarly depleted?

The better answer is not to deny the shortage but to face the scale of the rebuild. That means accepting that wartime footing is, as CSIS put it, "not a destination that can be declared but a condition that must be continuously built, tested, and sustained". It means prioritising lower-cost alternatives alongside high-end interceptors so that expensive missiles are not wasted on cheap drones. It means coordinating with allies on production-sharing agreements rather than hoarding capacity. And it means treating the munitions industrial base as a strategic asset rather than an afterthought to be addressed only after the next war has begun.

Secrecy is one way to manage public fear. It is a poor way to manage an industrial base.