This describes a textbook drop in consumer confidence. We saw it during the debt limit deal and we’re seeing it now. The problem is that the media has described what’s actually happening so poorly that the consumer doesn’t really even know what the problem is or what they should advocate.

Do they get that the “fiscal cliff” means a combination of tax increases and spending cuts that would wreck the economy?

Do they have the conception of budget cuts being bad for the economy, after three years of non-stop panic about high deficits?

This confusion makes it very difficult to reach a solution that works for the economy.

Zeke Miller of Buzzfeed highlights this new wrinkle in President Obama’s stump speech: taking credit for some good economic numbers of late.

Economic analysts are giddy about a recent spate of positive consumer-based indicators, on not only housing starts but consumer confidence, retail sales, auto sales and even unemployment. At the same time, in the same economy, the numbers run completely the other way when it comes to the corporate sector. Joe Weisenthal runs down the numbers. Some of them are sentiment-based, which I view with similar skepticism around a national election as I do with things like consumer confidence. But there are hard numbers around capital expenditures, and export growth, and corporate hiring plans, and even corporate profits, that have all turned negative.

So what’s going on?

A series of economic data released today has pretty bad news for those hoping for a sustained recovery that will increase job and GDP growth.

The Conference Board’s Consumer Confidence index shot up today, rising from 61.3 in August to 70.3 in September. This typically correlates with a brighter outlook for the economy, and could lead to stronger consumer spending. However, it may be worthwhile to ignore the Conference Board’s index in the last couple months of an election cycle.

As people become more worried about the future and stop expecting their incomes to increase, they become less likely to spend money on non-essentials. Given how much of our economy is driven by consumer spending, this lack of optimism could easily cause any modest growth we had been seeing to stall.

The disconnect between the Masters of the Universe, whether on Wall Street or at the Fed, could not have been clearer in this last week. When you compare the mindset of Wall Street and the Fed with the economic conditions that local city managers are seeing, people notice that city services are being squeezed and jobs are being lost. In places like Topeka, the city budget for next year envisions lower revenue, which is hardly a sign of economic recovery. When the monthly consumer sentiment survey showed people are losing confidence in the economy, Wall Street was shocked. Maybe they ought to get out a little more, and talk to some city managers.