The Iran war may be nearing its conclusion, but it's been a costly conflict for US consumers.
Moody's Analytics chief economist Mark Zandi said on Wednesday that households have been feeling the pinch of higher consumer costs brought on by the war. He recently estimated that the four-month conflict has cost each household $750, but in a recent op-ed in the The Philadelphia Inquirer, Zandi upped that number.
"One thousand dollars," he wrote. "By my calculation, that's the effective cost of the Iran war to the typical American household—so far. While the U.S. and Iran have agreed to a ceasefire and are talking to end the war, the costs are still mounting."
Zandi broke down the math on his estimates, laying out the specific costs imposed on US consumers. He noted that they may still increase, even if the current ceasefire holds and fighting doesn't escalate again.
The war has already cost US households an additional $300 in higher gas costs but Zandi maintains that the figure will increase.
Fuel prices rose rapidly during the war as the Strait of Hormuz's closure disrupted global oil flows. While prices have dipped recently, Zandi doesn't expect to see them fall below the $3 per gallon level seen prior to the war.
"The road back to prewar prices will be long," he said. "The insurance that oil tankers require to operate will be much more expensive given that the Iranian regime can seemingly shut down the strait at will."
Zandi also discussed the possibility of Iran's government imposing new fees on oil tankers that can only pass through the Strait, leading to a higher per gallon cost for drivers.
If gas prices are rising, so is the cost of diesel, which powers much of the shipping industry.
"Higher diesel prices also mean that anything delivered to our homes on an Amazon or UPS truck is more expensive," Zandi said. "And if your household is anything like mine, that's a lot of stuff. In total, the higher diesel prices have cost households approximately $200."
The cost of jet fuel has increased, which, by Zandi's estimate, has imposed an additional $100 on typical US households as airlines increase fares.
With food, energy and travel costs all rising, the Federal Reserve's mandate to keep inflation low has become complicated, and will could push the central bank to raise interest rates, a mover that would impose an additional $150 cost, he said.
"Prosecuting such a complex war so far from home is expensive, particularly given the considerable volume of sophisticated munitions used," Zandi wrote. "While the military costs have moderated with the ceasefire, they still amount to nearly $50 million more per day. All told, the war's military cost has reached $250 per household."
That all adds up to a $1,000 price tag for US consumers stemming directly from the Iran war, though Zandi added that his estimate is likely conservative and that costs could rise further.
