Securities investors bullish on homeland security

If readers do not believe us when we tell them the homeland security market is booming, — some say the waning power of the Republican party will hurt the industry — perhaps they will take the word of those willing to put their money where their mouths are. In remarks provided at the groups’ recent 4th Annual Homeland Security Conference, the New York Society of Security Analysts (NYSSA) reported that “the shift to a Democrat-controlled Congress will have minimal negative impact” on the industry. Among other leading indicators, NYSSA noted that both the SPADE Defense Index and the SecurityStockWatch.com 100 Index are up over 100 percent over the last five years, versus approximately 20 percent for the S&P 500. The SPADE index increased 19 percent in 2006, marking the seventh consecutive year it has outperformed the S&P 500.

In related news, the Federal Reserve Bank of New York has published a report detailing the effect of the homeland security sector on the market as a whole. In “Current Issues in Economics and Finance, What Has Homeland Security Cost? An Assessment: 2001-2005”, researchers Bart Hobijn and Erick Sager examine concerns that large-scale spending on security could hold back economic growth by diverting labor and capital from more productive uses. Given the modest increase of resources targeted to homeland security in the post-9/11 period, they conclude that the broader economic impact of higher security spending has been very limited.