In the decades following World War II, the aerospace industry was one of the most important in the United States. Apart from the international prestige to be gained by winning the space race, the ongoing threat presented by the Cold War between the United States and the Soviet Union drove the industry's growth. Aerospace contractors could be assured of billions of dollars of new contracts each year; interest in space travel and research was also high.

The collapse of the Soviet Union and the end of the Cold War in the late 1980s and early 1990s created a new reality for the aerospace industry. The immediate threat to national security disappeared, and with it, the need for high levels of spending. Other factors also combined to depress the aerospace industry. After the space shuttle Challenger disaster of 1986, the space program entered a decline. Decisions were made to reduce the reliance on the space shuttle through the 1990s, and NASA's budget was cut. In 2003, a second space shuttle disaster occurred when the space shuttle Columbia disintegrated in midair while reentering the Earth's atmosphere. This created further stress on the industry and led to renewed calls for decreases in NASA's budget.

The recession of the early 1990s, coupled with the Persian Gulf War, severely reduced the level of air travel. Meanwhile, a wave of corporate downsizing swept the country, and by the mid-1990s, more than one million management jobs had been eliminated. Because business travel has always been one of the mainstays of the airlines, the aviation industry saw even further reductions in air travel. The deregulation of the airline industry in the early 1980s had also led to the failure of a number of airlines. All of these events meant that fewer orders for new commercial aircraft were being placed with the major aerospace manufacturers. Between 1989 and 1995, more than 500,000 jobs were eliminated.

The aerospace industry recovered slightly in the late 1990s, with 898 jetliner orders in 1996, 940 in 1997, 1,124 in 1998, 776 in 1999, and 1,081 in 2000. Employment also recovered somewhat, but peaked in 1998. The industry began to experience another decline due to several factors, including the Asian financial crises, foreign outsourcing for engines and parts, competition with the European manufacturer Airbus, and a struggling economy. Airlines began to lose money as air travel declined in the first half of 2001. Orders for new aircraft severely declined and layoffs affected thousands of workers. The U.S. Department of Labor projects average employment growth for aerospace engineering and operations technicians through 2026.

The September 11, 2001, terrorist attacks caused a steep decline in commercial flight and orders for new commercial aircraft. Although the industry rebounded slightly in the years following the attacks, the economic recession in the final years of the 21st century's first decade took a considerable toll on the industry. By the late 2010s, conditions had improved and the industry was on stronger footing. According to a 2019 forecast from Deloitte Touche Tohmatsu, the order backlog for commercial aircraft exceeded 14,000 at the end of the decade, its highest point. During the next 20 years, the firm anticipated that approximately 38,000 aircraft would be produced worldwide. One potential challenge was that the industry's vast network of suppliers could have a difficult time keeping up with aircraft manufacturers' higher production, increasing the need for stronger supply chains and greater efficiency and productivity.

Safety was a pressing concern heading into the 2020s. In October 2018, 189 passengers were killed when a Boeing 737 Max 8 (Lion Air flight JT 610) crashed into the Java Sea. A crash involving the same type of aircraft (Ethiopian Airlines Flight 302 to Nairobi, Kenya) claimed another 157 lives in March 2019, prompting countries around the world to ground the aircraft as investigations unfolded. After fixing the software pertaining to the aircraft's anti-stall system, Boeing hoped to gain FAA approval to return the 737 Max 8 to service by the end of 2019. Meanwhile, many of the world's airlines sought compensation from Boeing to recover hundreds of millions of dollars in lost revenue from canceled flights.

The International Air Transport Association (IATA) indicated that airline industry revenues were forecast to reach $865 billion in 2019, up from $812 billion in 2018 and $755 billion in 2017. However, net profits were expected to total $28.0 billion in 2019, down from $30.0 billion in 2018 and $37.6 billion in 2017. The decline was occurring as expenses reached $822 billion in 2019, up from $765 billion in 2018 and $698 billion in 2017. Expenses had declined during the middle of the decade, but were on the rise due to increasing fuel costs.

The COVID-19 pandemic hit the aerospace industry hard. The global spread of the virus forced aviation services to ramp down operations to help limit the spread of the virus. According to Oliver Wyman, of the 27,500 aircraft actively flying at the beginning of 2020, only 7,500 remained in active service by mid-year—a decrease of over 70%. This may lead to innovative business models, such as leasing of aircraft by manufacturers and an increased emphasis on clean-energy government subsidies for major airline companies.

The U.S. Department of Labor projects that employment for aerospace engineers should experience a 2 percent increase through 2028, slower than average for all occupations. Since many aerospace manufacturers are contracted by the U.S. Department of Defense, their workers require security clearances, thus keeping jobs within the country. Aerospace engineers and associated workers will be needed to help redesign aircraft to reduce noise pollution and increase fuel efficiency.

The defense sector was in a strong position as the United States ramped up spending under the Trump administration at the end of the decade. Beyond the United States, other countries also were strengthening their military prowess. Deloitte Touche Tohmatsu explained that security threats were propelling defense spending in China, India, and Japan, and also among NATO countries. Rising geopolitical tensions in areas such as North Korea and the Middle East also boded well for this sector of the industry.

Although work on the International Space Station continues, NASA ended the space shuttle program in 2011. The Constellation program, developed to replace the space shuttle and launch new missions to the Moon and Mars, was planned to come online by 2015, but in 2010 the Obama administration ended the program's funding. A related program, Orion, was modified and chosen for implementation with a Space Launch System (SLS) intended to send vehicles beyond low earth orbit. The first manned Orion mission is scheduled to occur during the early 2020s.

The unmanned aircraft sector was poised for explosive growth at the end of the decade. After reaching $14.1 billion in 2018, the market was expected to achieve compound annual growth of 20.5 percent through 2024, totaling $43.1 billion, according to a 2019 Drone Industry Insights analysis. The federal government was doing its part to support the adoption of drones in the United States. For example, in 2017 the FAA launched its Unmanned Aircraft System (UAS) Integration Pilot Program (IPP), which focused on improving safety through stronger connections with the private sector, including manufacturers and operators, as well as local, state, and tribal governments. Participants focused on a wide range of UAV-related matters, including "night operations, flights over people and beyond the pilot's line of sight, package delivery, detect-and-avoid technologies and the reliability and security of data links between pilot and aircraft," according to the FAA's Web site.