Iran war has cost the US $38bn: How will it impact US economy, politics?

What Happened

The Congressional Budget Office (CBO) reported on Tuesday that the US war on Iran has cost $38bn so far, with an estimated additional $3bn per month if the conflict continues. The CBO stated that $25bn of the cost was expended munitions, that it could take five years to restore US stockpiles, and that the conflict is likely to fuel inflation by 0.5 percentage points in the first three months of 2027. The CBO's $38bn figure is close to the $37.5bn cited by Defense Secretary Pete Hegseth at a July 21 Senate hearing, but it excludes the cost of recent US strikes on vessels in the Strait of Hormuz, Iranian attacks on US military installations, and borrowing expenses. A separate Pentagon Office of Inspector General report released Monday found the war cost $33bn between February 28 and June 30, including $22bn in expended munitions, and acknowledged low weapons stockpiles and supply-chain bottlenecks. That report said Iranian attacks caused $184m in damage to US facilities in the Gulf and killed at least 18 US military personnel, and destroyed or damaged dozens of aircraft including at least 30 MQ-9 Reaper drones. President Donald Trump and the White House disputed the CBO's findings on munitions shortages, while Trump has claimed Washington has 'virtually unlimited' ammunition. The war began on February 28, launched by the US alongside Israel, and has entered its seventh month.

Key Actors

Why It Matters

The war is straining US munitions stockpiles and supply chains, creating a security risk for future conflicts, while fueling inflation and raising household fuel and food costs ahead of the November US midterm elections. The mounting fiscal cost, now on top of a national debt that surpassed $40 trillion last month, has intensified congressional opposition and eroded public support, with approval for military action against Iran falling to 31 percent in late August.

Watch For

Monitor whether the House-passed resolution to end the conflict advances in the Republican-majority Senate or faces a presidential veto, and track subsequent CBO and Pentagon Inspector General cost updates as the war enters its eighth month. Watch US fuel price trends reported by the American Automobile Association and the effect of inflation data on the November midterm elections, as well as any further Iranian actions in the Strait of Hormuz that affect global oil exports.