How much is the war with Iran costing Americans?

At the end of the sixth month of the war, the good news for the United States is that so far the American economy is coping better than expected. Most economists do not predict a recession and unemployment remains low.

But the war has its costs, and small businesses are feeling them especially hard. Aj Navarro, owner of two food delivery trucks in Sacramento, says: “Both trucks use generators to keep the food and drinks fresh. And they use a lot of fuel. I have to pass on some of the extra cost to my customers.”

Record oil prices

The main reason is high energy prices. “The high prices are a result of the war with Iran and the blockade of the Strait of Hormuz,” explains Bob McNally, an energy advisor to former President George W. Bush.

The fighting and blockade in the Strait of Hormuz have severely disrupted one of the most important shipping corridors for oil. The consequences are also being felt in the United States.

And it's not just about gas prices at the pump. Alema Croft, commodities expert at RBC Capital Markets, warns: "The oil market is particularly worrisome. Oil prices have reached record levels."

Transportation and food prices are rising

Higher oil costs also increase transportation costs. This increases the cost of transporting goods, food, and travel. Consumers are feeling the effects of the war every day.

At the same time, the conflict is becoming increasingly costly for the state, says Gabe Murphy of the taxpayers' organization, which deals with budget and tax policy.

"According to the most comprehensive estimates, the direct costs to taxpayers already exceed $100 billion. These are the figures from the end of June. Since then, the bill has increased significantly. To this must be added the costs that consumers are facing," Murphy emphasizes.

Double burden for citizens

According to one analysis, the war has cost American families about $1,000 per family so far. Citizens are paying for the conflict in two ways: through higher living costs and through the state budget. A large part of military spending is financed by new borrowing.

This means that the interest costs that the state has to pay will also increase in the coming years. In the end, this bill will also be covered by taxpayers. Among the rare winners of this war are the military industry and parts of the energy sector.

Fear of inflation and recession

Most economists, however, do not expect a serious economic crisis for now. The much bigger fear is that inflation will remain high for a long time. This could force the US central bank to continue to maintain high interest rates. The consequences of such a policy are also visible in the daily decisions of citizens. One of them is Sean Bennett, who is currently filling up his old car.

"So far, I've been driving a car that I bought without a loan. But buying a new vehicle now and paying the installments, with insurance and other costs, would be very difficult," he says. That's why he still doesn't know if he'll buy a new car anytime soon. And the answer to that question, he says, depends on the duration of the US war with Iran. /DW