Eight months into the war in Iran, the average American household is nearly $2,000 worse off, according to economist Mark Zandi. This adds a fresh economic pressure as the midterms approach.
"Nearly $2,000. By my calculation, that is what the Iran war has cost the average American household since the war began nearly eight months ago. Nationwide, that adds up to $265 billion," Zandi, chief economist at Moody’s Analytics, wrote on social media.
That is seven times more than what Secretary of Defense Pete Hegseth told Congress the war had cost the nation between February 28, when the U.S. and Israel launched joint strikes on Iran, and late July.
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Asked by Democratic Senator Dick Durbin about how much the war was costing the nation, Hegseth gave the Senate Appropriations Committee a figure around $37.5 billion. He also told senators the Pentagon would have needed another $67 billion—nearly double the previous bill—for further operations in the Middle East.
But Hegseth’s figure covers only the direct military cost of the war. For American households, the price has been far higher, as the conflict’s ripple effects through global markets, particularly oil, have pushed up inflation and everyday costs.
Newsweek contacted Zandi, the Pentagon and the White House for comment by email on Tuesday morning and is awaiting responses.
A Breakdown of the War’s Cost: Energy Prices
Higher energy costs—including gas and diesel at the pump—are contributing most to the additional costs faced by Americans because of the war in Iran.
"A gallon of regular goes for $4.37, up from just under $3 before the war. Diesel is above $6, and jet fuel has nearly doubled. As winter approaches, the much higher price of home heating fuel is also adding to the costs," Zandi wrote on X.
As of Tuesday morning, the national average gas price was $4.34 per gallon, according to the American Automobile Association (AAA), while diesel went for $6.28 per gallon. Before the war in Iran started, causing the disruptions in global oil supply that have driven up energy prices across the world, gas prices had finally fallen below the $3 per gallon mark, for a national average of $2.98 per gallon. The average diesel price was below $4 per gallon.
Oil analysts have told Newsweek that gas and diesel prices will not return to normal levels until the Strait of Hormuz, where one fifth of the world’s oil used to transit, reopens. And, even then, it would take a long time before U.S. consumers see prewar prices at the pump.
Zandi’s calculations found that the average American household is spending $1,100 more due to higher gas and diesel prices at the pump and higher home heating bills since the war in Iran began.
The Watson School of International and Public Affairs of Brown University is also tracking the total consumer burden of the war due to higher gas and diesel prices. Researchers say that Americans have paid an additional $133.3 billion since February 28 as gas prices jumped by over 46 percent and diesel prices by over 70 percent.
Higher gas prices have added $73.5 billion to the burden shouldered by American consumers, while higher diesel prices have brought an additional $59.8 billion, for a total of an extra $1,017.76 per U.S. household.
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Higher Interest Rates
Rising inflation, driven mainly by higher gas prices, has contributed to the Federal Reserve’s decision in September to raise its key rate for the first time in three years, from 3.5 percent to 3.75 percent.
Most analysts think that this increase, which has come despite fierce opposition by President Donald Trump, who has long been demanding the central bank lower rates, will be followed by further hikes in the coming months. While the Federal Reserve does not directly control mortgage rates, its actions influence the movement of the 10-year Treasury yields, which in turn have an impact on mortgage rates.
After the Federal Reserve’s September decision, mortgage rates shot up to above 7 percent, which had not happened since January 2025. As of the week ending October 8, the average 30-year fixed-rate mortgage, the most popular home loan among American borrowers, was 7.40 percent; this was up from 6.30 percent a year earlier, according to Freddie Mac.
"Long-term rates are also up a lot—fixed mortgage rates have climbed from below 6 percent before the war to 7.5 percent," Zandi said. "By our reckoning, the higher rates have cost the economy about $540 per household."
Military Costs
Zandi estimates that the military costs of the war are adding $360 per household, based on the figures acknowledged by the Pentagon.
Experts believe that the military costs may be higher than estimated by the Pentagon when considering they have to cover repairs, maintenance and replacement costs that were not included in the upfront costs announced.
"I am certain we will reach one trillion dollars for the Iran war," Linda Bilmes, war budgeting expert and the Daniel Patrick Moynihan Senior Lecturer in Public Policy at Harvard Kennedy School, said in a statement. "Perhaps we have already racked up that amount."
The War’s Human Cost
This might not show up on Americans’ wallets, but there has also been a human cost to the war in Iran.
Twenty-one U.S. service members have been killed during operations related to the conflict by U.S. officials, and 865 have been wounded, according to an update posted on Friday evening to the Defense Casualty Analysis System website.
It is unclear how many Iranian civilians have been killed in the conflict since late February. U.S.-based rights group Human Rights Activists News Agency (HRANA) claimed in April that 1,701 civilians were killed in the country, including at least 254 children.
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‘A Small Price to Pay’
Zandi said that, considering that "the war’s costs taken together have absorbed about half the average American household’s income gain over the past eight months," it is "no wonder the war is so unpopular."
The latest data on support for the Iran war shows that around two-thirds of Americans (65 percent) disapprove of the way Trump is handling the conflict, while only a third (33 percent) approve, according to a recent Pew Research Center survey. That was up from 61 percent who disapproved of the president’s handling of the conflict in March.
Meanwhile, Trump’s popularity has also taken a hit, with the latest approval rating showing an all-time low of net -23.5, according to Nate Silver.
Faced with plunging approval ratings and criticism over the rise in energy prices in the U.S., Trump has repeatedly justified the ongoing war in Iran as "a small price to pay" to make sure Iran does not hold a nuclear weapon in its arsenal.
During a rally in Grand Island, Nebraska, last week, the president told the rally goers that gas prices were "a little bit high" but it was ultimately "a very small price to pay, and it’s gonna be over with very soon. It’s essentially almost over with."
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The comments reflect one of the reasons the administration initially gave the country for going to war with Iran, framing the issue as one guaranteeing the nation’s and the world’s long-term security.
"Just so you understand, we’re saving this country and the world from what could be one of the worst tragedies ever," he said in Nebraska. "It’s a small price to pay for keeping the world safe, keeping our country safe. They can take out a city. Let them take out Los Angeles, let them take out San Diego," he added, prompting anger from California leaders.
It is unclear how the higher cost of living will weigh on the November midterms, though Democrats hope that frustration over inflation will fuel their victory and give them control of Congress. Trump, on the other hand, promised last month that he would offer a $5,000 payout to every U.S. adult if Republicans hold on to their majorities in both chambers.
The president is also actively trying to bring fuel prices down, through a mix of executive orders—such as the one that permitted the use of dyed diesel on the road.
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
Contact Newsweek editors on this story: Ben Kelly and James Debens