BAKERSFIELD, Calif. (KERO) \u2014 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.<\/p>\n
Economists estimate the war is costing about $1 billion per day.<\/p>\n
Richard Gearhart, a professor of economics at California State University, Bakersfield, said the immediate financial impact is tied to federal spending and the nation\u2019s growing debt.<\/p>\n
\u201cThe immediate impact is the Trump administration runs a deficit, and so we\u2019ve run up the debt,\u201d Gearhart said. \u201cWe\u2019re about $40 trillion in debt in the United States, and so this just adds to it.\u201d<\/p>\n
Gearhart said the direct costs of the war are only part of the economic picture.<\/p>\n
Instability in the Middle East can drive up oil prices, which often has broader effects across the economy.<\/p>\n
\u201cThe secondary impacts of an oil price shock on the U.S. economy are the big ones,\u201d he said. \u201cThat\u2019s where taxpayers are really going to be hit.\u201d<\/p>\n
David Valadao said military action comes with financial costs but argued there are also economic risks tied to global instability.<\/p>\n
\u201cThe impact that those terrorist organizations had even going after vessels out that are moving product around,\u201d Valadao said. \u201cAnd those are products that we purchase and products that we export. And we\u2019ve seen some of those organizations doing that.\u201d<\/p>\n
Valadao also pointed to California\u2019s existing energy policies, saying high fuel prices in the state predate the current conflict.<\/p>\n
\u201cWe\u2019ve always had the highest fuel prices in California, and it\u2019s not because of a war that started two weeks ago,\u201d he said. \u201cIt\u2019s because of this governor and the Democrats in control of Sacramento.\u201d<\/p>\n
Vince Fong said the military operation is focused on long-term security.<\/p>\n
\u201cWe certainly need to be fiscally responsible, but look, Iran is a clear and present danger to America,\u201d Fong said.<\/p>\n
Fong said one of the central goals of the operation is preventing Iran from developing a nuclear weapon.<\/p>\n
\u201cIf they did so, then the entire world would be in jeopardy,\u201d he said.<\/p>\n
Still, economists warn that if the conflict continues, Americans could see the economic impact in everyday expenses.<\/p>\n
Gearhart said rising oil prices could contribute to higher inflation.<\/p>\n
\u201cFor every 10% increase in the price of oil, and right now we\u2019re at about a 40% increase, inflation is going to increase by about 0.2 percentage points,\u201d he said.<\/p>\n
That increase could cost the average American family about $1,500 per year in lost purchasing power.<\/p>\n
Gearhart also warned the conflict could slow economic growth.<\/p>\n
\u201cThe war is going to reduce GDP growth by about 1 percentage point,\u201d he said. \u201cSo actually we\u2019re looking at negative economic growth here in this country, which means layoffs, which means higher unemployment, which means fewer jobs.\u201d<\/p>\n
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