BAKERSFIELD, Calif. (KERO) — As the United States continues military operations against Iran, economists and lawmakers say the growing cost of the conflict could have ripple effects for taxpayers and the broader economy.
Economists estimate the war is costing about $1 billion per day.
Richard Gearhart, a professor of economics at California State University, Bakersfield, said the immediate financial impact is tied to federal spending and the nation’s growing debt.
“The immediate impact is the Trump administration runs a deficit, and so we’ve run up the debt,” Gearhart said. “We’re about $40 trillion in debt in the United States, and so this just adds to it.”
Gearhart said the direct costs of the war are only part of the economic picture.
Instability in the Middle East can drive up oil prices, which often has broader effects across the economy.
“The secondary impacts of an oil price shock on the U.S. economy are the big ones,” he said. “That’s where taxpayers are really going to be hit.”
David Valadao said military action comes with financial costs but argued there are also economic risks tied to global instability.
“The impact that those terrorist organizations had even going after vessels out that are moving product around,” Valadao said. “And those are products that we purchase and products that we export. And we’ve seen some of those organizations doing that.”
Valadao also pointed to California’s existing energy policies, saying high fuel prices in the state predate the current conflict.
“We’ve always had the highest fuel prices in California, and it’s not because of a war that started two weeks ago,” he said. “It’s because of this governor and the Democrats in control of Sacramento.”
Vince Fong said the military operation is focused on long-term security.
“We certainly need to be fiscally responsible, but look, Iran is a clear and present danger to America,” Fong said.
Fong said one of the central goals of the operation is preventing Iran from developing a nuclear weapon.
“If they did so, then the entire world would be in jeopardy,” he said.
Still, economists warn that if the conflict continues, Americans could see the economic impact in everyday expenses.
Gearhart said rising oil prices could contribute to higher inflation.
“For every 10% increase in the price of oil, and right now we’re at about a 40% increase, inflation is going to increase by about 0.2 percentage points,” he said.
That increase could cost the average American family about $1,500 per year in lost purchasing power.
Gearhart also warned the conflict could slow economic growth.
“The war is going to reduce GDP growth by about 1 percentage point,” he said. “So actually we’re looking at negative economic growth here in this country, which means layoffs, which means higher unemployment, which means fewer jobs.”
Stay in Touch with Us Anytime, Anywhere:
