Zions Bank economist warns tariffs and policy shifts raise uncertainty; advises budget caution for cities

Robert Spendlove, senior economist at Zions Bank, told the Sandy City Council on April 1 that upcoming reciprocal tariffs and broad federal policy shifts are raising uncertainty and increasing the probability of an economic downturn, though he did not make recession his baseline projection.

Spendlove said the immediate unknown is the scope of tariffs the federal administration might impose; he summarized options under consideration as a flat across‑the‑board tariff, a country‑grouping approach, or a granular list of tariffs applied by product line. “We don't really have a lot of certainty or a lot of understanding about exactly how this is going to move forward,” he said, adding that higher tariffs would raise the U.S. average tariff to levels not seen since the mid‑20th century.

Why it matters: tariffs, large fiscal changes and deregulation all work together to change prices, trade relationships and business expectations. That mix affects household purchasing power, local retail sales (a major source of municipal sales tax revenue), and the timing of decisions about hiring and construction.

Key points from Spendlove’s presentation

- Tariff scenarios: He discussed proposed tariff structures the administration was weighing, noting possible carve‑outs for certain energy products and staggered implementation for items such as automobile parts. He highlighted previous administrations’ tariff history to frame potential economic effects.

- Monetary policy and markets: Spendlove noted the Federal Reserve had held the federal funds rate near 4.3 percent amid the uncertainty. He described a distorted yield curve and stressed-market volatility that complicate forecasting. “It feels like we're back in the spring of 2020,” he said of the current heightened uncertainty.

- Consumer and lending signals: Spendlove pointed to falling consumer confidence and rising credit‑card delinquencies as soft signs of strain, while noting that hard data — GDP, employment and inflation measures — lag and have been less reliable in the short term. He said mortgage rates had been roughly in the mid‑6 percent range, with the 10‑year Treasury around 4.1 percent in recent days.

- Local economy and housing: Utah’s fundamentals remain comparatively strong, Spendlove told the council. He cited Utah’s unemployment near 3.3 percent, sustained population growth concentrated along the Wasatch corridor, and year‑over‑year employment gains. He also flagged a shortage of housing units nationally (about 6 million) and locally (roughly 30,000 units in Utah), and noted building permits have fallen as lenders and builders pull back.

Advice for local policymakers

Spendlove recommended that local governments identify “high risk” revenue streams and set aside reserves. He said Utah’s Legislature had earlier designated some revenue as high‑risk when stimulus funds proved volatile, and that those reserves had been used to cover budget shortfalls. He suggested city budget offices consult state forecasting offices and adopt bands for revenue uncertainty when finalizing budgets.

Q&A highlights

Council members asked about real‑time indicators, retail and sales‑tax sensitivity, and timing of price effects from tariffs. Spendlove said some price impacts — especially on perishables like produce — could appear within weeks; durable goods could take months as inventories are drawn down. He said markets can adjust when the tariff regime is clear, but the worst effect is prolonged uncertainty.

Council Member Sharkey asked whether there is a single real‑time metric to watch; Spendlove recommended market volatility indexes, weekly initial unemployment claims and consumer‑facing retail measures as useful near‑term indicators. On budgeting, he repeated the counsel to set aside high‑risk revenue and maintain “rainy day” reserves.

What was not decided

The council received the presentation and engaged in extended Q&A. No action was required or taken on the economic outlook; the presentation was informational.

Speakers quoted and paraphrased in this article are drawn from the April 1 Sandy City Council transcript.