CBO Reports US-Iran Conflict Costs $38 Billion, Inflation Risks Loom
The Congressional Budget Office has revealed that the US military campaign in Iran, known as Operation Epic Fury, has cost approximately $38 billion from its start on February 28 to August 1. This expenditure, averaging about $7.6 billion monthly, raises concerns about inflation and the depletion of military resources, with ongoing costs projected at $2 billion to $3 billion per month. The report highlights significant impacts on the US weapons stockpile and the potential need for emergency funding requests.
The Congressional Budget Office (CBO) has put a hefty price tag on Operation Epic Fury, the ongoing US military campaign in Iran, revealing that it has cost approximately $38 billion from its launch on February 28 through August 1. This translates to an average expenditure of around $7.6 billion per month over the initial five months of operations. Looking ahead, the CBO projects ongoing monthly costs of between $2 billion and $3 billion, contingent upon the intensity of military engagements on the ground and in the air.
The largest portion of these costs is attributed to munitions replacement, which has reached a staggering $21.7 billion. Following closely is the expense for flying hours, amounting to $10.4 billion, reflecting the relentless pace of air operations over Iranian territory. Additional costs include elevated fuel expenses of $2.7 billion, equipment losses totaling $1.9 billion, and increased operational tempo across bases and support infrastructure, which has incurred $1.5 billion in costs. Earlier Pentagon estimates aligned closely with the CBO's figures, suggesting total expenditures of around $37.5 billion as of mid-2026.
Beyond the headline figure, the CBO report uncovers a more troubling reality regarding America's military capabilities. It is estimated that the US has likely depleted 50% to 67% of its critical missile-defense interceptors since June 2025. The process of replenishing this inventory is not as simple as placing a rush order; the CBO estimates that it will take approximately five years to restore these critical assets.
Emergency Funding Amid Rising Military Expenses
In light of these escalating costs, the administration is reportedly preparing emergency funding requests that could reach as high as $70 billion. This funding would be intended to cover both ongoing operational costs and the lengthy process of restocking depleted arsenals.
The Common Sense Test
The CBO further projects that the conflict will contribute to a 0.5 percentage point increase in Personal Consumption Expenditure (PCE) inflation by the first quarter of 2027 compared to February baselines. Core PCE, which excludes volatile food and energy prices, is expected to rise by 0.3 points. This inflationary pressure is largely attributed to disruptions in energy supply, particularly due to military operations near the Strait of Hormuz, a critical passage for approximately 20% of the world's oil, and ongoing instability in the Red Sea shipping corridor.
If the anticipated $70 billion emergency funding request materializes, it will have significant fiscal implications. Such additional deficit spending could exacerbate inflation dynamics, potentially compounding the price pressures already forecasted by the CBO. As the costs of military engagement in Iran continue to mount, the implications for both the economy and national defense readiness remain a pressing concern.
