I like the RBC Cash Index because it seems to be constructed in a way to provide the least biased read on consumer sentiment of any index I know about. Notice I did not say it was unbiased, but the survey is taken in such a way as to minimize bias.

The index was started in 2002 and is normalized to 100 meaning at 100 the consumer is exactly neutral about the economy about the economy and more specifically their micro-view of their own economy in relation to the macro economy as a whole. The latest results show consumer confidence at 56.3 in early January 2008. That is down from almost 66 in December and 95.3 in January 2007.

Consumer confidence is not a leading indicator of the fundamentals of the economy, no matter what the pundits claim. While we were slipping into the current economic situation they were all saying, “all is right with the economic world because the consumer is spending!” But as we see now, this recession is not driven by the consumer.

I guess I shouldn’t be surprised the politicians seeking office don’t get it. Last night at the Republican debate in South Carolina John McCain flat out said we are not in a recession and won’t go into a recession. What a stunning example of cluelessness.

I disagree with Ron Paul on many things but at least he has it right about the economy. He said he believes we are in a recession and the actions by the Fed are just going to make it worse.

Of course, the days of a President single-handedly being able to maneuver or even guide our economy are long gone. A sitting President could move markets with a comment or a speech, not any more. The reason is now markets have access to more hard data and information and instead of relying on the opinion of a policy wonk, they are able to look at the data and decide for themselves.

Consumer confidence is down because the economy is already in a recession.