The conflict with Iran has cost the typical American household an estimated $1,000, with some estimates going as high as $2,200.
These financial burdens stem from a combination of direct military spending and indirect costs of high fuel prices, food, and other expenses passed on to consumers.
This was according to an estimate shared last week by Moody’s Analytics chief economist Mark Zandi.
Gas Prices Are Not The Only Culprit In Consumers’ Cost Increases
President Donald Trump signs Executive Orders in the Oval Office, Thursday, April 24, 2025. (Official White House Photo by Abe McNatt)
Former President of the United States Donald Trump speaking with attendees at the 2022 Student Action Summit at the Tampa Convention Center in Tampa, Florida. By Gage Skidmore.
While oil prices have returned to pre-conflict levels, the price that consumers pay at the gas pump has not. At this time last year, the average price of gas was $3.12 per gallon.
At the start of the US and Israeli bombing campaign against Iran, the average price of gas was $2.98 per gallon.
However, despite oil prices returning to normal, the price consumers are paying at the pump is currently averaging $3.84 per gallon. That is up 23 percent from a year ago and a four-year high.
Chevron Corp.’s Chief Financial Officer, Eimear Bonner, said, “It’s going to take time, though. There is a lag between…oil prices and reductions in oil prices and when that shows up at the pump, but we expect that prices will come down as things continue to normalize.”
President Trump accused oil companies of overcharging customers by failing to adjust their pump prices in line with the significantly lower prices they are paying for oil.
And many consumers agree, arguing there was no such “lag” when gas already paid for at the pumps skyrocketed when the bombing began.
Today’s oil prices are at $68.46 per barrel, the lowest since February.
Gas prices have hit consumers’ wallets in many ways, such as airlines raising ticket prices by $100.
Groceries and everyday shopping have also gotten pricier because of diesel, the fuel of choice for trucks and heavy farming equipment that transport food and goods to the market.
The fighting has hiked diesel prices even more than regular gasoline, pushing costs up for everything that has to be transported: That’s another $200 per household, according to Zandi.
Zandi Says His Estimate Is Conservative
“My estimate that the Iran war has cost the typical American household $1,000 and counting is, if anything, conservative,” Zandi wrote. “The true cost is likely higher—meaningfully higher. It’s fair to ask whether it was worth it.”
And the associated costs to the military will be high.
The replacement costs of missiles and bombs, the repair to US bases in the Middle East that were damaged by Iranian missiles, and the replacement of aircraft that were either damaged or destroyed add up.
“Wars always have a long tail of costs,” Linda Bilmes, a public policy expert at Harvard’s Kennedy School, said in an interview recently with Fortune magazine.
Blimes estimates that the conflict will cost US taxpayers over a trillion dollars and says it would raise the total cost per US household to $7,500.
Higher Interest Rates Are Hurting Taxpayers
In January, many investors expected the Federal Reserve to cut its benchmark interest rate. But the Fed refused to cut rates, and then inflation surged as a result of the conflict.
This has halted the central bank’s plans to lower borrowing costs, according to economists, with some forecasters even penciling in a rate hike later this year.
That amounts to a missed opportunity for consumers and businesses, Zandi said.
The associated cost was about $150 per household.
Former Federal Reserve Bank of Kansas City President Esther George, who has always favored higher interest rates, said that a rate increase may be forthcoming.
“Inflation is a problem right now, and it’s been a problem for a while in the United States,” she told Fortune. “There’s probably a good chance that you’ll have to talk seriously about raising rates, not cutting.”
The Pentagon’s Bill to Congress: $113 Billion
The conflict in Iran that stretched from February 28 to June 16 cost U.S. taxpayers an estimated $113.3 billion.
According to its data tracker, it ran in real time from the first strike, using the Pentagon’s own briefing to Congress — $11.3 billion for the first six days — plus $1 billion/day ongoing.
However, Senator Chris Coons (D-DE) noted that the figure is likely an undercount, and independent analyses suggest the true cost is higher. The counter is now frozen; the full breakdown and methodology remain available.
About the Author: Steve Balestrieri
Steve Balestrieri is a National Security Columnist. He served as a US Army Special Forces NCO and Warrant Officer. In addition to writing on defense, he covers the NFL for PatsFans.com and is a member of the Pro Football Writers of America (PFWA). His work was regularly featured in many military publications.
