CBO puts five-month cost of Iran war at $38 billion
The budget office also raised its inflation forecast for early 2027 by half a point.
Published
The Congressional Budget Office says the war in Iran has cost the United States $38 billion over its first five months. The office also raised its projection for annual PCE inflation in the first quarter of 2027 by 0.5 percentage point, citing the conflict's effect on prices.
The fighting has continued on several fronts. American forces attacked Iranian boats that tried to seize a Navy drone. Iran's Revolutionary Guard has claimed a fourth drone shootdown in four days near the Strait of Hormuz, though the US military has not confirmed it, Iranian state media reported.
Diplomatic activity has picked up alongside the fighting. Treasury Secretary Scott Bessent said the administration is now focused on ending the Iranian threat rather than managing it, and said Trump and Chinese leader Xi Jinping will continue talks on Iran at a summit this month. Bessent also said the United Arab Emirates has made forward-leaning statements about cutting trade ties with Iran. Turkey's foreign minister, Hakan Fidan, has called for an end to reciprocal attacks in the Gulf. Iran's top security official, Mohsen Rezaee, has said on social media that Iran will not join talks with Washington and has accused the US president of sending mixed signals.
The $38 billion cost and the inflation increase are significant but in line with what markets have already absorbed. Oil prices had already risen on pipeline shutdowns and supply worries tied to the war, and signs of possible dealmaking, including the planned Trump-Xi talks, keep open the chance of de-escalation rather than a sharper downturn.