How you choose to tackle the concerns of your employees about changes in the federal government’s involvement in the economy isn’t as vital as when you do so. Empowering employees to ask questions, raise concerns and become more educated can help those employees feel more confident in investing and saving for retirement.
For years, investors have been able to sidestep the rugby match that politics has become over debt and interest issues. But those days may be over as new public policy pushes may be impacting the arena. Employees may have new concerns about how public policy changes could impact the stock market (and their retirements). Plan Sponsors can help ease employee worries through education. By inviting your plan advisors in to discuss what’s prompting the changes and providing information on your workplace’s shared folders or intranet, you can arm employees with information.
There has been plenty of discussion over how to measure the American economy – is it strong because of the resilience of the stock market? Or weak because of stagnant wage growth? Whichever you believe, the fact that the US has experienced a decade of subpar growth was highly noticeable at the beginning of the pandemic. Even before many Americans were rendered jobless by the pandemic’s closure of service-related spaces, like restaurants and retail spaces, as well as through personal services like salons, gyms and coaching, there was a clearly identified need for an influx of cash to reboot American manufacturing. The lack of American made goods, now in sharp relief as supply chain issues and shipping woes have brought back shortages and made buying a pair of basic black heels feel like the quest for the Holy Grail, has been a concern of both major political parties for years. The trade off for that enhanced government intervention in manufacturing, infrastructure and supply chain, is enhanced regulation.
As some writers have made clear, President Biden’s activist role in building a better foundation for American manufacturing is a sharp change from his democratic predecessors, like Presidents Obama and Clinton. Back in January of 2021, when he first took office, Biden’s plans to rebuild the economy were predicted to have a positive impact on the stock market. “The Biden agenda is expected to result in a faster-growing economy, a stronger stock market and higher interest rates in its first year.”
Given that, how do Plan Sponsors help employees understand the potential change in this level of regulations? One area that could be helpful for employee education is to explain the role of the Federal Reserve Bank (the Fed) and it’s influence on interest rates and inflation. The Fed took several measures intended to stimulate and support the growth in the economy that began in 2021 and may have stalled due to the rise in COVID-19 rates related to the Delta variant. Advisors to Plan Sponsors may be able to explain some of that impact to employees. That could involve discussion of how Fed action impacts bonds as well as stocks, as those two investment products behave differently to Fed actions. This discussion might also include how the Fed acts independently from the rest of the federal government. Plan Sponsors may also want advisors to explain the role of changes in the Department of Transportation (supply chain, infrastructure) and the Department of Commerce (statistics, job creation, economic growth) have on the economy.
How you choose to tackle the concerns of your employees about changes in how involved the federal government is in the economy isn’t as vital as when you do so. It is always a great time to work with employees about their concerns. Empowering employees to ask questions, raise concerns and become more educated can help those employees feel more confident in investing and saving for retirement. Education efforts that lead towards those goals will always be successful.
 Other helpful information for investors about the Fed can be found here:
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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