This photo was taken last week immediately after my first $60 tank of gas.  I mumbled under my breath for a few minutes, then called my wife.  I wasn't angry, mind you.  Just mindful of the fact that I spent $60 on a tank of gas.

Multiply my incredulity times all of the drivers in the country and you'll understand why consumer confidence is at its lowest point since 1980.  When life's staples get costly, it tends to make people nervous about their personal budgets.

Budgets and sentiment are a big deal to market players because consumer spending accounts for 70 percent of the U.S. economy.  When confidence is weak, Americans tighten up the purse strings and grind the economy to a halt.

Or so we're told.

Since January 2007, the stats tell a different story:

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Using Google Trends, we can see that "recession" is overtaking "inflation" in import.

Mortgage rates are highly dependent on inflation, and/or the absence of inflation.  Because inflation erodes the value of the U.S. dollar, it also erodes the value of dollar-denominated mortgage bonds. 

This renders bonds less valuable to global investors and that forces mortgage rates higher.  This is different from recession's impact on mortgage rates. 

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The blue line stands for Consumer Confidence, trending downwards throughout 2007.

The red line stands for Retail Sales, trending upwards throughout 2007.

Clearly, there's no connection because consumer surveys are supposed to measure how Americans feel about the broad economy and their personal economy over the near-term.

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The University of Michigan Consumer Sentiment Survey slipped to 88.4 in March, down from February's 91.3 and its lowest level in six months.

We talk about the complete uselessness of the UofM survey quite a bit around these parts and today provides a terrific example that backs it up.

Despite a terribly weak UofM survey, the Commerce Department released their Personal Spending report.  That report revealed that consumers are undeterred and continue to drop dollars at their favorite stores and restaurants. 

Personal Spending was up by whopping 0.6% over the previous month and the personal savings rate remained below water at -1.2%.  People are still spending more than they save (even as they are less confident about the future).

I remain convinced: Confidence surveys are worthless because what people say they will do their money, and what they actually do with their money are two very different things.

The Consumer Confidence index is a "relative" survey and it is released each month. 

"Relative" means that the value each month is quoted in a "relative" value to when the survey was first conducted in 1985 (which is assigned a value of 100.0).

This month's Consumer Confidence survey registered a 98.9, meaning consumers are a little less confident about the economy than they were in 1985.

Today's reading doesn't translate into anything economic so it's not that big of a deal to regular people just going about their lives.  But we compare it to last month's reading of 85.2, the stark difference is a big deal. 

A month-to-month jump of that magnitude is huge.

See, after last month's abysmal reading, the Chicken Littles were out on the TV talking about recession and how the U.S. is hurting.

• "Gas prices are too high!" 
• "Hurricanes ruined our economy!" 
• "My pay is decreasing!"

But this month, afterthe Consumer Confidence Survey, everything's suddenly fine.  The talking heads are even optimistic as we head into the Holiday Shopping hom stretch. 

It's completely irrational.  Let's look at the notes comparing this month to last: 

1. Gas prices are down (but are still high)
2. Hurricane-impacted areas haven't rebuilt and are facing more setbacks
3. Real wages are decreasing for American workers

Really, nothing has changed.  The only reason why the Consumer Confidence survey rebounded so sharply is because gas prices fell this month.  Period.  This reminds us that Consumer Confidence is an emotional statistic and not a statistical statistic.  There's a difference.

So, a lesson is here to be learned:  Higher gas prices make people miserable.  Lower gas prices make people happy.  Politicians would be well-served to remember that.