Loren Thompson, a Virginia-based defense consultant, said the news was not all bad.
He said the last-minute agreement by lawmakers signaled that sequestration cuts were unlikely to ever be implemented as currently planned, although some additional cuts were likely.
“When the chips are down, the two parties can find common ground and that means sequestration is not going to happen the way it is currently mandated,” Thompson said. “This is not just a reprieve for the defense industry, it’s a signal that the worst aspects of sequestration are never going to occur.”
Byron Callan, analyst with Capital Alpha Partners, said an eventual compromise was likely to include some further cuts to defense spending, in addition to $487 billion in cuts already due to be implemented over the next decade.
“Defense spending absolutely will be part of the next debt ceiling/sequestration cliff debates,” Callan wrote in a note to investors.