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Contracted economist warns tariffs and lower consumer sentiment cloud Santa Fe revenue outlook
Summary
Dr. Riley White told the Santa Fe Finance Committee on April 24 that new federal tariffs, falling consumer sentiment and weaker GDP readings raise downside risk for locally important gross receipts tax (GRT) revenues, though tourism and high‑income consumer spending have so far buffered the city.
Dr. Riley White, a tenured professor at the University of New Mexico who serves as the city’s contracted economist, told the Finance Committee on April 24 that rising tariffs and falling consumer confidence have raised the odds of a U.S. slowdown and can weigh on Santa Fe’s revenue outlook.
"We never really recovered our pre‑COVID certainty," White said, explaining that consumer sentiment — a key predictor of spending — has trended downward since 2020 even as overall spending remained elevated in recent years.
White told members the Federal Reserve’s real‑time GDP models showed a sharp pullback in early 2025, driven largely by companies front‑loading imports ahead of newly announced tariffs. Federal Reserve indicators cited by White tracked first‑quarter GDP near negative 2.8 percent, a figure he described as significant but subject to revision as subsequent monthly data arrive.
Why it matters: Santa Fe relies heavily on GRT, which is strongly correlated with consumer spending and tourism. White said the city’s top 10 percent of earners account for roughly 50 percent of spending nationally; because Santa Fe is a tourist economy that draws high‑spending visitors, those households have so far helped hold up local activity even while middle‑ and lower‑income household spending cools.
White outlined several possible revenue scenarios for the city: a base case of continued but slower growth in GRT; a low‑end scenario tied to prolonged trade restrictions and weak demand that could produce a modest multi‑year decline; and a higher‑end scenario in which current weakness proves short‑lived. "The most likely scenario for GRT is actually a continued slow, slower than previously increased, but a continued slow uptick," he said.
Local indicators White flagged for Finance Committee members included housing and rental markets that are showing signs of softening: he cited a Santa Fe Redfin median single‑family sale price of about $612,000 and a median days‑on‑market near 108 days, compared with New Mexico’s median price of roughly $371,000. Apartment rents in Santa Fe were shown in his slides near $2,200 per month on average.
White emphasized the transmission risk from tariffs to inflation and interest‑rate policy: higher import costs can push up prices, which in turn can make the Federal Reserve less inclined to lower interest rates, he said. That dynamic raises the risk of a stagflation‑style outcome, with muted growth and still‑elevated prices.
Committee response and next steps: Committee members asked few technical questions during White’s presentation. The economist closed by saying his forecasts use a range of estimates (low, median, high) and that the city’s most likely GRT trajectory is a modest upward trend with downside risks if tariffs and global conditions deteriorate.
Ending: White urged the committee to treat the current outlook as a cautionary input into revenue forecasting for the FY26 budget and recommended monitoring near‑term national releases for confirmation of first‑quarter weakness.
