Does defense spending stimulate the economy?

[Benjamin Frank 2.0]

The reason the US continued to enjoyed such good times the following decades is because Europe and Asia was devastated by the war.

This is not true. European and Asian economies recovered extremely rapidly and by the early 1950s, had surpassed their prewar peaks. I don't know where this myth came from and why it's so durable. I heard this from my teachers in grade school like 30 years ago. I'll probably be hearing it for the rest of my life. It has disturbing implications that if America just blew up the rest of the world, we'd all be living in paradise, which is obviously not true.

(West) Germany was the first to recover by the early 1950s.
By 1955 all western European countries were producing more than in the 1930s.
https://www.britannica.com/topic/history-of-Europe/The-reflux-of-empire

I wouldn't necessarily make as much out of that as you do though since the 1930s was the Great Depression. I know in the U.K there was a perception anyway that the U.K economy was struggling until the late 1950s (30 years after the start of the Great Depression.)

The reason it's taught is because there is a lot of truth to it, it wasn't until the mid 1950s at the earliest that much of the rest of the world started to compete with U.S exports again.

[Benjamin Frank 2.0]

By definition, stimulus either means fiscal stimulus, referring to additional consumption/spending induced by direct government spending or lowering taxes, or monetary stimulus, referring to lowering interest rates or increasing the money supply through central bank lending policies. Stimulus does not have anything meaning with respect to "benefitting the average American." Defense spending in colloquial usage regarding lucrative contracts or federally managed programs thus is fiscal stimulus.

If the question is more on if defense spending increases the welfare of the median American, whether that be measured through GDP/capita, real hourly wage, or some other metric, it is hard to isolate all the effects of various defense spending policies throughout WWII to today. A good question is to ask about the opportunity cost of such defense spending--absent this spending occurring, would the government allocate the expenditures to another program or reduce expenditures overall and how would that affect the median income of an American worker?

One concept that is not perfect but has some proponents is the "fiscal multiplier", which is essentially the estimated ratio of money spent on some government policy to the amount increase in nominal GDP (or GNI). There is a plethora of economic literature on comparing the fiscal multiplier of different policies under all kinds of assumptions, but almost all the time in the current context, direct cash transfers to the lower classes tends to have the highest multiplier.

In general as a biased observer, I would say it's easy to say overall that the GWB admin, including the billions spent regarding Afghanistan and Iraq, had an overall worse outcome on the vast majority of Americans, and that alternative policies would have done better, but isolating the effects of defense appropriations across the income/demographic spectra of the populace is something difficult to answer. There are probably some smart people somewhere that have done the research to find some semblance of conclusions there though.

The concept of the 'fiscal multiplier' is Keynesian demand side economics. As a neoclassical supply side economics adherent, I disagree that, in the long run, there is any 'fiscal multiplier' except when the economy is not operating at full potential output (full employment.) I.E during a recession.

However, I agree that in the short run, government deficit spending does stimulate the economy (as occurred under President Reagan, President W. Bush and President Trump.)

The part I think you left out is the borrowing costs required to finance either the spending or the tax cuts (which was most of the form of the stimulus with Reagan, Bush and Trump) which can 'crowd out'  non government borrowing by ultimately being inflationary and reducing the generally more sustainable private sector borrowing (as we saw at the end of the Reagan Administration, the Bush Administration starting in 2006 before the rise of oil prices and, to some degree, the Biden Administration in 2022.)  As Milton Friedman said "the long run fiscal multiplier is dead."

However, there is a time lag between the government stimulus and any negative consequences to the economy

[Benjamin Frank 2.0]

In regards to more micro effects, I don't think there is any question that military spending promotes high tech research and development (especially DARPA) and if that leads to network effects of high tech clusters, that can have long term economic benefits including in local areas.

However, of course, it's hard to separate high tech clusters that were started by the military versus university research triangles and private sector founded clusters.

I think much of that benefit would depend on the degree that the military technology and the workers and their education behind them are transferrable to civilian purposes.