Confidence amongst U.S. consumers fell to a 28-year low in May, according to the confidence index of Reuters/University of Michigan Surveys of Consumers. The biggest concern among American consumers: Inflation.

The two largest culprits behind inflation are presently food and energy. If we take the two out of the equation, inflation is actually going down. In April, core inflation (which excludes food and energy) actual fell from March.

Will we soon have the rapid inflation we experienced in the early 1980s? I'm not so convinced it will happen. And here's why:

House prices are falling faster than they ever have. Anything related to construction or housing is also falling. Auto prices? They are falling, too. In all reality, house prices and car prices have actually been deflating for the past two years. Can we have inflation while the two largest lifetime expenses of American consumers are falling in price? I think not.

But the inflation numbers the government releases each month are based on a very old formula that does not take the cost of housing in as a large element. Mortgage installments are likely the biggest single cost of American families each month... but they are not properly reflected or accounted for in calculating the official inflation numbers announced each month.

Monday, our resident technical expert, Anthony Jasanksy, made a great case in PROFIT CONFIDENTIAL for $100.00-per-barrel oil. As I write this column this morning, oil has just hit a three- week low. My readers know my angle: When analysts and reporters are coming out in droves predicting $150.00-to-$200.00- per-barrel oil (like they did last week), it probably won't happen. Oil will likely go the other way, as the market always delivers what's not expected of it.

Food is the wild card. Prices have been rising for a variety of reasons and I believe there is good cause for concern about rising food prices. But at the same time, I've never seen a single item, like food, bring the inflation rate significantly higher.

The "crude" fact, if you don't mind the pun, is that when consumers in general have a strong feeling about the economy, like they do now with consumer confidence at a 28-year low, they are usually wrong. I see better times ahead, as I believe the worse for the U.S. economy is behind it. I also see deflation as being an equal, if not greater, threat to the U.S. economy than inflation.

NEWSFLASH: Alan Greenspan, likely the biggest maker of economic "bubbles" this generation has ever seen, said he doesn't see another bubble coming for a long time. Speaking to a group in Montreal, Canada, Greenspan said that bubbles cannot form when inflation is rising, as he sees happening right now. I think Greenspan is right. I just can't see current Fed chief Bernanke repeating the same mistakes Greenspan made.