In most categories, confidence is earned through prior performance. Economic confidence is a shakier category, requiring interpretation of outside factors that might, but might not, affect the economy.

Spectrem’s Millionaire Investor Confidence Index suffered the biggest drop in its 13-year history in May, and only slightly rebounded in June. Other markers from the Spectrem Confidence report for June showed other signs that the country’s economic outlook is slipping.

The May SMICI® dropped 17 points, an unheard of decrease in an index that most often ranges between 20 and -20. At the time, the investors surveyed for the index pointed to political matters for shaking their confidence in the economy and the markets.

In June, the SMICI® rebounded slightly, from 3 to 6, but the Spectrem Affluent Investor Confidence Index dropped from 6 to 2. At the same time, the percentage of investors who said they were not investing for the month of June increased to 42.0 percent, the highest mark in 3 ½ years.

Asked what they saw as the biggest threat to reaching their household financial goals, 25 percent pointed to the political climate, and that was the response with the highest rate of return.

This lack of confidence may begin to show itself in the stock market and in other economic markers. There is no reason to believe the political atmosphere of the country is going to improve any time soon, as dysfunction remains the name of the game in Washington, D.C., and if it is that factor that most affects the outlook of investors, it would seem inappropriate to predict an upturn in investor confidence any time soon.

There were some positive numbers coming out of the SMICI® other than the slight improvement in confidence overall. Among Millionaires, the outlook for household assets went up from 50.36 to 57.03, and stock investing improved from 27.7 percent to 32.8 percent. Likewise, stock mutual fund investing rose from 31.4 to 40.6.

But all of the corresponding numbers among less affluent investors fell, and the overall Spectrem Millionaire Household Outlook fell for the second straight month, down to 19.50, the lowest level since October 2016, when no one knew what the upcoming election was going to bring.

We now know what the election brought, but confidence has not returned as a result.

Part of the problem may be that nothing has happened yet. There is no new health care law, and there is no subsequent and much anticipated change in the federal tax code. Such inaction can lead to a drop in confidence that anything is going to happen, and that lack of confidence can snowball if nothing happens to turn it around.

Advisors know as well as anyone the value of investor confidence. It is when investors are confident in the direction of the country economically that they are more likely to want to get involved initially or expand their involvement. A lack of confidence has the opposite result, as investors hold back on their investment plans out of fear of the future.

Will a health care solution improve investor confidence? Any new health care law is likely to be controversial, but if it moves the government and health care officials off the sidelines it may do the same for investors. The belief that a new health care law will motivate and direct a new federal tax code revamp would also boost investor confidence.