Costs of a Needless War Has an Economic Impact on Citizens

“Trump’s war in Iran has wiped out 1.5 years of wage growth,” Economic Policy Institute

The Trump administration’s decision to start a war with Iran has imposed disastrous costs (both economic and humanitarian) around the world. The U.S. has been insulated from these costs more so than most other countries. Yet, even here the costs are extremely large. The war’s effect in pushing up U.S. energy prices has erased all the real (inflation-adjusted) wage gains workers have made during his second term.

According to today’s Consumer Price Index (CPI) release, overall inflation was 4.2% over the last year. The sudden burst in inflation, along with slowing nominal wage growth, means the average hourly real wage for private-sector workers is now no higher than it was in January 2025.

So far, excessive inflation has been limited to energy and airfares. But as long as the war continues, there is an increasing threat of price increases spilling over to the broader economy. Such (price increases) will trigger a more permanent increase in the cost of living and cause further reductions in real earnings.