Tariffs, Economic Activity & The Super Bowl
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This discussion is with Vector advisor and COO Jason Ranallo.
Summary
You might wonder—do tariffs or the Super Bowl cause inflation? Locally, and in the short term, yes. This week, two seemingly unrelated events—proposed tariffs and the Super Bowl—offer us a chance to dig into consumer behavior in the face of potentially rapidly changing pricing.
Tariffs can drive up prices on goods which increases costs for consumers and businesses. Tariffs, broadly, act like a tax—they create friction in trade, making it harder for businesses to operate efficiently. Think supply chain disruptions, re-tooling of manufacturing, and changing workforce dynamics. Similarly, the Super Bowl creates a localized economic surge, with host cities seeing higher hotel rates, packed restaurants, and a surge in demand for ride shares.
In our view, neither tariffs nor the Super Bowl generate new money—they simply redistribute existing economic resources. Tariffs can shift economic activity from importers to domestic producers.
This week, fans will shift their entertainment dollars toward football and the big game’s necessary accouterments. After the Super Bowl, however, New Orleans, the host city, will clean up, fans will travel home, and the local economy will trend to average. The $3,500 ticket, hotel stay, and meals out attending Super Bowl weekend are dollars not spent on a new car or a vacation to Cancun.
Tariff Takeaways for Investors
· We believe at this point the risks to US economic growth from tariffs are low.
· Presidents can implement tariffs easily, just as they can reverse course.
· Diversification is still one of the best tools to manage uncertainty.
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