PNN – University of Michigan economics professor estimates the cost of the current war for the United States at several trillions of dollars.
According to the report of Pakistan News Network, Justin Wolfers, an economics professor at the University of Michigan, has challenged the Pentagon’s announced figure for the cost of the war with Iran in an article for the New York Times. Some of the points of this analysis are as follows:
- Pentagon’s Incomplete Accounting
Wolfers believes that the $25 billion figure announced by Defense Secretary Pete Hegsett is simply a “cash accounting” of the equipment expended (such as 2,000 Tomahawk and Patriot missiles). He emphasizes that the true cost to each American household is in the trillions of dollars, which the government is deliberately trying to hide.
- Falling Market Value and National Wealth
According to this economist’s calculations, the war with Iran has reduced the value of the S&P 500 index by about 5 percent; this means that about $3 trillion has been lost in the value of top American companies due to the instability caused by the war. In addition, the US economic growth rate is expected to decrease by half a percentage point due to the conflict, which means a loss of $400 billion in national income.
- The Federal Reserve’s impasse and the jobs crisis
The war has left the US central bank (Federal Reserve) in a difficult dilemma. Raising interest rates to curb war-induced inflation could cost hundreds of thousands of jobs and push the economy closer to recession. It is estimated that the current geopolitical risks will cost the US $200 billion and leave one million Americans unemployed.
- Iran’s Stabilization in the Strait of Hormuz
The author warns that if Iran succeeds in stabilizing the toll collection system in the Strait of Hormuz, the revenue from it (even a dollar per barrel) would provide a huge source of funding for Tehran’s reconstruction of its nuclear programs. This means that Iran could use the money it gets from controlling global trade to advance the projects that Trump has vowed to destroy.
- Exploding Military Budget by 2027
The US government recently requested a $1.5 trillion defense budget for 2027, a 40 percent increase over this year. This $600 billion jump would cost every American household $4,000, a cost deemed necessary to maintain military superiority in a region where Iran controls the chokepoint.
- Conclusion
Justin Wolfers concludes that the costs of war are not limited to the battlefield, as the administration claims. Recalling the experience of the Iraq war, which cost the United States $3 trillion, he warns that the ultimate cost of a war with Iran will be in the trillions rather than billions, with consequences ranging from “starvation of millions of people in the world” to “long-term debts for future generations of America.”