Looking Ahead: Policy Changes, Inflation, & Consumer Confidence
Consumer Confidence, Policy Shifts, and What to Do With All This Uncertainty
We’ve mentioned before that September is historically the worst month for the stock market, but this September also delivered a heavy hit to consumer confidence.
On September 28th, the Conference Board reported that its Consumer Confidence Index (CCI) dropped for the third month in a row. This index measures how optimistic or pessimistic consumers feel about the economy using five key questions — and September’s reading was 109.3, down from 115.2 in August. (For context, the baseline score in 1985 was 100.)
Here’s what that means: while we’re still ahead of 1985 sentiment, confidence has been sliding steadily. Just 19% of consumers now say conditions are “good,” while 25% call them “bad.”
According to the Conference Board’s statement, “Concerns about the state of the economy and short-term growth prospects deepened, while spending intentions for homes, autos, and major appliances all retreated again. Short-term inflation concerns eased somewhat, but remain elevated.”
What’s Behind the Drop in Confidence?
Inflation
We flagged inflation early in 2021 in our March and June editions of NEST Edge. And while mild inflation can help fuel economic recovery, rapid price hikes understandably make consumers uneasy.
Tapering and Interest Rates
We covered this in detail in our September newsletter: when the Fed begins tapering, they reduce asset purchases, eventually raising interest rates. While this can help cool inflation, it also slows down hiring and spending, which may hurt growth in the short term
The Debt Ceiling
We’ve made the “hanging over our heads” joke already, but the debt ceiling remains a source of tension. Though temporarily suspended until the end of 2021, uncertainty over whether it’ll be raised again has ripple effects — including potential interest rate hikes, market volatility, and deeper issues in the already fragile bond market.
Policy Changes on the Horizon
Much of this uncertainty connects back to policy — particularly the Biden administration’s $3.5 trillion social safety net and climate bill, which recently passed the House Budget Committee.
To fund it, the House Ways and Means Committee introduced legislation that would eliminate certain high-value Roth strategies starting January 2022.
Here’s a summary of the proposals:
No more mega-backdoor Roth conversions of after-tax dollars for any income level (effective Jan 1, 2022).
For those earning $400K+ with retirement balances over $10M, 50% of the excess must be withdrawn.
If balances exceed $20M, 100% of the excess must be withdrawn from Roth accounts (up to certain thresholds).
High-income earners with balances over $10M would also be prohibited from making further IRA or Roth contributions.
All excess withdrawals are taxed as income.
These proposals come on the heels of reports like the one about Peter Thiel’s $5 billion Roth IRA, sparking concern that tax-sheltered accounts are being used by ultra-wealthy investors in ways Congress never intended.
If enacted, these changes would dramatically impact estate and retirement planning strategies — especially for high-net-worth individuals.
What to Do With All This Uncertainty
It’s a lot — we know.
But here’s the truth: there’s always been “a lot going on.” The good news? You don’t have to navigate it alone.
At NEST, we combine a personalized financial planning approach with real-time, data-informed investment management. Our strategies are designed to withstand political drama, policy shifts, and headline hysteria, keeping your goals front and center.
📩 Email the partners directly at info@nestfinancial.net to schedule a no-obligation consultation.
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We’ll help you keep your outlook optimistic — no matter what the Consumer Confidence Index says.
DISCLAIMER: This content is for educational purposes only and does not constitute financial or investment advice. For personalized planning, contact us directly.