Iran war cost US households $1,000, economist estimates

The ongoing Iran war has imposed an estimated $1,000 cost on average U.S. households, primarily through increased fuel prices and military expenditures, according to Moody's Analytics chief economist Mark Zandi. Zandi detailed in an op-ed that disruptions to global oil flows via the Strait of Hormuz have significantly impacted consumer costs.

Higher gasoline prices, attributed to the closure of the Strait, have cost households an additional $300. Zandi anticipates that prices will not return to pre-war levels of below $3 per gallon due to increased insurance costs for oil tankers and potential new fees imposed by Iran. The cost of diesel fuel, essential for shipping, has also risen, adding approximately $200 to household expenses as delivery costs for goods increase. Furthermore, increased jet fuel prices have led to higher airline fares, contributing another $100 to household budgets.

Beyond consumer goods, the direct military costs of the conflict have reached an estimated $250 per household. Zandi noted that the Federal Reserve's efforts to maintain low inflation have become more complex due to these rising costs, potentially leading to interest rate hikes that could impose an additional $150 burden on households. Zandi cautioned that his estimate is conservative and costs could continue to mount even if the current ceasefire holds.