Ex Terra Extra: Navigating Space Commerce in 2025
How Will the U.S. Economy Shape the Industry?
It's difficult to believe that we are a quarter of the way through the 21st century ... but here we are in 2025. In many ways, the U.S. economy is in turmoil. Budget deficits are historically high, and the Fed is showing reluctance about dropping interest rates because inflation seems to be at least slowing and the job market, which has shown signs of life, hasn't collapsed. Against that backdrop, the space economy seems to be experiencing a mini-boom. While the exuberance of the SPAC era seems to have subsided, there is a lot of interest in the new developments in space commerce. Consumers are being offered an opportunity to connect their existing cell phones to satellites, private companies are sending landers and rovers to the Moon, and SpaceX still has Mars directly in its sights. Then there is the excitement generated by the debut on Wall Street of Karman Space and Defense in an IPO. In may ways, this is more than just business. As we enter the second quarter of the 21st century, the future is in many ways unfolding before our eyes.
The U.S. Economy: A Launchpad for Growth, But With Turbulence Ahead
Let’s start with the big picture. The U.S. economy is the launchpad that propels so much of what we do in space. And as of mid-February 2025, the numbers tell a story of resilience mixed with caution. Real GDP growth in the fourth quarter of 2024 was a solid 2.3%, following a robust 3.1% in the third quarter driven largely by consumer spending and government investments in infrastructure and technology. For those of us in the space sector, this is good news: consumers with money to spend mean potential demand for satellite services, space tourism, and even the products of in-space manufacturing. But there’s a catch, and it’s a big one.
The U.S. trade deficit hit a staggering $1.2 trillion in 2024, with imports surging by 6.6% to $4.1 trillion while exports lagged. That’s a concern for anyone relying on global supply chains. Think satellite components, launch vehicle parts, or even the raw materials for lunar mining ventures. The December 2024 trade deficit widened to $98.4 billion from $78.9 billion the previous month, a trend that could tighten margins if the strong U.S. dollar continues to make our goods less competitive overseas. For engineers and scientists, this might mean rethinking sourcing strategies, or leaning harder on domestic production. For investors, it’s a signal to watch how trade policies, especially the tariff proposals from the new administration, might shake things up.
Inflation, too, is a factor that can't be ignored. It’s eased to a core rate of 3.2% as of early 2025, but some analysts are quietly suggesting it could tick back up if those tariffs kick in. The Federal Reserve could then respond with more rate cuts, potentially bringing rates down to a range of 3.25% to 3.5% by year-end. That’s a boon for borrowing to fund new projects like satellite constellations or orbital factories, but it also raises the specter of renewed inflationary pressure, which could erode purchasing power and increase costs for raw materials. For venture capitalists and private equity folks, this is a balancing act: lower rates might spur investment, but you’ll need to hedge against potential price spikes.
The other elephant in the room is the new Trump administration and D.O.G.E. There have been accusations from some quarters that Elon Musk is only looking to feather his own nest, particularly when it comes to space. D.O.G.E will be giving NASA the same scrutiny that it has given to other departments, and rightfully so. And to be sure, one only has to look at some of the cost overruns and delays in the Artemis program to know that there are certainly some inefficiencies there. NASA recently cancelled its VIPER program because the rover was essentially obsolete before it could be launched to the Moon ... and a rover developed by private company Astrolab will take its place on that mission.
While NASA has historically been on the cutting edge of innovation, sharing the technology developed for the space program with private companies both involved with space and completely unrelated, it may be that now private industry will be developing the new technology and sharing it with NASA. SpaceX now builds most of the rockets launching NASA payloads to space, and it doesn't routinely throw them into the ocean after their missions. Multiple companies are competing to build a private space station to take the place of the ISS. That whole world is being set on its head, and the current administration seems to be enthusiastic about that kind of privatization.
On the brighter side, the labor market is holding strong. Unemployment hovers around 4.1%, and job growth has consistently exceeded expectations, with over 300,000 jobs added in recent months of 2024, a trend likely continuing into 2025. For companies hiring engineers or scientists for microgravity research or satellite design, that’s both an opportunity and a challenge. Talent is out there, but competition is fierce, especially for niche skills. And for defense professionals, the flat budget proposals for NASA and Pentagon space spending in 2025 suggest a shift toward commercial partnerships. That means companies like yours might need to step up as co-investors or service providers, proving return on investment faster than ever. And that doesn't even begin to take into account the effects that DOGE might have on budgets.
Consumer and business confidence, as gleaned from social media and economic reports, is a mixed bag. Across social media, some are cheering the strong corporate earnings and consumer spending, while others are wary of policy uncertainty and the trade deficit. For those of us in the space game, the Department of Commerce’s push for digital equity ... connecting over 2.4 million unserved homes and small businesses to high-speed internet ... offers a silver lining. More connectivity means more potential customers for LEO satellite services, whether it’s Starlink, AST SpaceMobile, or the next big thing.
So, what’s the takeaway for 2025? The U.S. economy is a launchpad with some turbulence. Growth is there, but so are risks, including trade deficits, inflation, and policy shifts. For the commercial space industry, it’s a call to innovate, optimize, and prepare for volatility. Whether you’re designing a new satellite or pitching a fund, keep your eyes on the data, and be prepared to pivot if necessary.
Space Commerce: A New Frontier of Production and Connectivity
So if the U.S. economy is the launchpad, space commerce is the rocket, hurtling us toward a future where orbit isn’t just a destination but a workshop, a marketplace, and a strategic asset. In the first quarter of 2025, we’re witnessing a flurry of activity that’s inspiring. but can also be a bit overwhelming.
Let’s zero in on two hot areas: in-space manufacturing and satellite services. In-space manufacturing is not sci-fi anymore, it’s happening. Companies like BioOrbit, based in the UK, are at the forefront, planning to conduct trials on the International Space Station in early 2025 to crystallize protein drugs in microgravity. Why microgravity? Because without Earth’s pull, proteins can form more uniform crystals with fewer imperfections, potentially making cancer immunotherapies more effective and easier to administer. That could take the form of subcutaneous injections instead of hours-long IV sessions. For pharmaceutical engineers and scientists, this is a game-changer. BioOrbit, founded in 2023 by Katie King with a PhD in nanomedicine from Cambridge, has backing from the European Space Agency and UK Research and Innovation. Their vision is a permanent factory in space, churning out drugs that could transform healthcare on Earth.
But BioOrbit isn’t alone. Varda Space Industries has already shown it’s possible, producing ritonavir in orbit and eyeing commercial payloads. Space Forge, out of Wales, is tackling high-quality materials like alloys and semiconductors, while Orbital Composites is 3D-printing electronic components for solar arrays and antennas.
Redwire merged those two concepts by 3-D printing a human meniscus aboard the International Space Station. These efforts leverage microgravity, vacuum, and radiation, conditions impossible to replicate on Earth, to create products that are either superior or entirely new. For venture capitalists, the appeal is clear: these are high-risk, high-reward bets with the potential to disrupt markets. But the challenges are real, launch costs, regulatory hurdles, and scaling from prototype to production.
Satellite services, meanwhile, are exploding. AST SpaceMobile is making headlines as a hot stock, offering direct-to-cell connectivity that could bring 4G/5G to remote areas without traditional infrastructure. SpaceX’s Starlink, with nearly 5 million users as of early 2025, is pushing the envelope further, rolling out texting and soon voice/data services via satellite. For engineers, the technical challenge is immense: managing spectrum interference, ensuring signal quality, and dealing with the sheer volume of satellites in Low Earth Orbit. But while there has been plenty of excitement, there is also cause for concern, like the debris incident over Poland that’s sparked debate about sustainability.
The launch market itself is heating up. Rocket Lab and SpaceX are lowering access costs, with SpaceX’s expansion at Kennedy Space Center, including the Roberts Road project for Starship production, setting the stage for even more activity. Blue Origin’s New Glenn first orbital flight in early February 2025 adds another player, intensifying competition. For defense professionals, this proliferation of capabilities is a double-edged sword: more options for national security, but also more complexity in managing space traffic and debris. The U.S. Office of Space Commerce is rolling out TraCSS in 2025 to address this issue, with initial phases focusing on safety alerts and debris tracking, a critical step for anyone planning long-term orbital operations.
And then there is sustainability. The 27th Commercial Space Conference in Washington, D.C., on February 12, 2025, emphasized a circular space economy, minimizing waste and maximizing reuse. For government contractors, this is a hint at future regulations, while for investors, it’s a reminder to factor environmental impact into your due diligence. K2 Space’s $110 million raise this month signals confidence, but also underscores the need for scalable, sustainable models.
It's fairly well acknowledged that in-space manufacturing could revolutionize everything from drugs to materials, while satellite services are bridging the digital divide and bolstering security. But the path forward isn’t smooth. Regulatory clarity, debris management, and cost efficiency will determine who thrives. It’s an exhilarating time to be in space commerce, but that means you probably should buckle up and hang on for the ride.
Karman Space & Defense IPO: A Beacon for the Industry
On Wall Street, the initial public offering of Karman Space & Defense has captured the attention of many investors. On February 13, 2025, Karman made its debut on the NYSE under the ticker KRMN, and the response exceeded expectations. Some view this financial event as a milestone for our entire industry, and it deserves a closer look.
The numbers are impressive. Karman offered 23 million shares at $22 each, up from an initial range of $18 to $20, signaling strong demand. That pricing gave the company an initial market valuation of about $3 billion, and the IPO raised $506 million, with significant contributions from existing shareholders like Trive Capital. By the end of the first trading day, shares opened at $30 and closed near $31, a 40% pop from the IPO price. By week’s end, the stock hit $32, pushing Karman’s valuation to $4.2 billion. For investors, this is a textbook success story, but for the rest of us, it’s a window into what’s driving the space and defense sectors.
Why the enthusiasm? Karman’s focus on defense and space technologies taps into two massive trends. First, national security demands are rising. With geopolitical tensions increasing, there is a need for resilient satellite networks. Second, the commercial space economy is booming, projected to grow at 6.7% annually through 2034, reaching well beyond its $570 billion valuation in 2023. For engineers and scientists, Karman’s capital infusion means more resources for R&D, whether it’s new satellite systems, orbital infrastructure, or even partnerships in lunar exploration. For defense professionals, it’s a signal that public markets see value in the intersection of space and security, potentially accelerating projects with strategic importance.
The IPO was managed by heavyweights like Citigroup and Evercore, with RBC Capital Markets, William Blair, and Baird as joint bookrunners, which lent credibility and drew in institutional investors. But the success also raises questions. The question remains whether Karman can sustain this momentum, or if it is a bubble fueled by hype? The jury is still out, but for private equity and venture capital listeners, Karman’s path offers lessons. Trive Capital’s partial exit suggests a strategic cash-out, but it also highlights the volatility of the space tech market. Spire Global’s failed maritime division sale and Mynd.ai’s trading halt earlier this month remind us that not every story ends in triumph.
What might Karman do with the proceeds? While specifics have not been detailed, typical uses include debt repayment, capital expenditures, and R&D. For those of us in the industry, that could mean faster development of satellite constellations, more robust launch capabilities, or even ventures into in-space manufacturing. But the broader implication is clear: the public markets are hungry for space and defense plays, but companies need to deliver results quickly to maintain that appetite.
For government and regulatory professionals, Karman’s IPO is a wake-up call. As more companies go public or expand commercially, we’ll need clearer policies on space resource use, ownership, and sustainability. The legal ambiguity around lunar mining or orbital manufacturing could become a bottleneck, and Karman’s success might push regulators to act. At the same time, for innovators it’s a reminder to align with national priorities, security, sustainability, and economic competitiveness.
In the end, Karman’s debut isn’t just about one company. It’s a beacon for the industry, showing that space and defense can capture mainstream investor interest. But it’s also a challenge: to innovate, scale, and navigate the uncertainties ahead. Whether you’re designing a new satellite, pitching a fund, or shaping policy, Karman’s story is both inspiration and warning. It’s a reminder that we’re on the cusp of something monumental, but only if we get it right.
Looking to the Stars: A Call to Action
All that being said, it's fairly clear that 2025 will be a year of opportunity wrapped in complexity. For engineers, scientists, investors, and defense pros, the path forward demands agility, foresight, and collaboration. The U.S. economy offers a strong foundation, but trade deficits, inflation, and policy shifts require careful navigation. Space commerce is exploding with potential, from microgravity labs to global satellite networks, but sustainability, regulation, and competition are hurdles that can’t be ignored. And Karman’s success shows the market’s appetite for innovation, but also its impatience for results.
For those of us in the trenches, this is more than a business, it’s a mission. Whether you’re perfecting a new alloy in orbit, securing a launch window, or strategizing the next investment, you’re part of a movement that’s reshaping humanity’s future.