Greenspan Warns, Stocks Rally

Consumer confidence surveys, as the Conference Board's, only assess superficial attitudes, Kenny says. "They tap into the rational, or left brain, side of the consumer. They do not access the emotional side of the consumer, the right brain, where motivation is located."

As these attitudes can change from one hour to the next hour, "they are not stable, not reliable."

The booming housing market however "is a reflection of a much deeper sense of security and the quest for emotional security that will never be measured by telephone surveys," he continued.

The Fed is also concerned that soaring energy costs eventually will seep into core prices and that government spending for post-Katrina reconstruction will boost inflation next year. And if home equity will help consumers weather soaring energy costs, short-term rates may have to go much higher still.

To view Gregg Greenberg's video take on today's market, click here.