The rising price of gasoline is leading Canadians to feel less confident about their futures, the Conference Board says. (CBC)

Shortly after the benchmark index of the TSX hit a record high of 15,000, CBCNews.ca received an e-mail from a reader who asked "Then why is my RRSP down 20 per cent?"

It's a good question, and it underscores the reality that many people are skeptical about the economic figures tossed out by Statistics Canada, think tanks and the financial media.

The stock market can't be doing that well, people say. Inflation can't be that low. The economy is in terrible shape, isn't it? In short, the personal experience of many Canadians just doesn't seem to jibe with the stats.

That disconnect may be more than just a case of misperception. There may be good reasons why the economic figures that Canadians read may well be at odds with what they are feeling.

Why isn't my portfolio keeping up?

First, let's deal with the record TSX. The S&P/TSX composite index hit an all-time high of 15,000 on May 20, 2008. That represented a rise of 50 per cent in less than three years and a stunning 25 per cent in just four months.

But most investors won't have noticed a similar rise in their portfolios unless they mirrored the index. And that index is heavily weighted in resource stocks, like oil companies, gold miners and fertilizer producers. Prices of those commodities have been soaring, to put it mildly, and the stocks of companies that produce them have been following suit.

About half of the weighting of the S&P/TSX composite index is in the energy (oil and gas) and materials (fertilizers, golds, base metals) sectors.

But if you owned more typical, broad-based mutual funds, they would have fallen short of matching the market's key index because the typical Canadian fund has less weighting in resources than the index and is often overweight in financials, which have not performed that well.

On top of that, mutual fund investors typically pay a management fee that eats two to three per cent of a fund's annual return, so a fund must beat the market by that margin just to stay even.

Just three stocks — EnCana, Potash Corp. of Saskatchewan, and Research in Motion —account for more than a tenth of the weighting of the entire S&P/TSX composite index. Ignore those stocks and it will be difficult indeed to keep pace.

So for many investors, the perception of not keeping up with the market is well grounded.

Is inflation really that low?

People look at soaring prices for housing, gasoline, airfares, bread and other things they spend money on and declare that inflation can't really be running at less than two per cent a year.

But Statistics Canada says its standard basket of consumer goods in April 2008 cost just 1.7 per cent more than it did last year.

How is this possible, you ask? Part of the inflation disconnect is due to the strong Canadian dollar. It's now worth 15 per cent more than it was a year earlier, and that made anything imported from the U.S. cheaper (all else being equal). So fresh fruits and vegetables from the U.S. cost a lot less. If you don't buy fresh produce, you may not have noticed that. But the prices of those products are factored into the CPI.

Computers also cost less than they did a year ago, as did clothing and footwear. Carmakers also began cutting prices in 2007 as the Canadian dollar reached parity with the U.S., with the result that average vehicle prices are almost seven per cent lower than they were a year ago. That helped to offset price increases in gasoline and bread.

The one percentage-point GST cut this past January also helped to lower the inflation rate by 0.6 percentage points, Statistics Canada estimates.

Some people think the consumer price index underestimates inflation. But Statistics Canada insists it's the best measure available. Only once has Stats Can acknowledged a problem with it. In 2006, it admitted that it had made a mistake in factoring in hotel and motel room prices, with the result that it under-reported the CPI by an average of a tenth of a percentage point from early 2001 to mid-2006.

Our 'slumping' economy

Consumer confidence in Canada fell to a seven-year low in May 2008, the Conference Board says. Housing sales were down from last year, manufacturing is in recession, tens of thousands of factory jobs have disappeared, the economy shrank in the first quarter of 2008. So times are really bleak, right?

Well, not according to some economists. In May 2008, BMO Capital Markets economist Doug Porter came out with a report listing 10 reasons to feel good about the Canadian economy.

"We know that bad news sells, but this is ridiculous," he wrote, criticizing the financial press for all the "gloom and doom" stories that greeted Canadians in 2008.

Porter ticked off Canada's low inflation rate, rising real incomes, healthy government surpluses, record high employment rates, record car sales, a strong TSX, and rising trade surpluses as positive economic benchmarks.

"The glass is much more than half full in Canada," he says. "So instead of obsessing about a temporary bout of cyclical weakness, driven entirely by our largest trading partner, Canadians should instead be embracing the world of opportunities that still await." His last comment references the much weaker economic performance of the United States. We in the financial media have certainly spilled a lot of ink (virtual and otherwise) on that topic.

This "doom and gloom" may also be a question of perspective. If you work in the auto or forestry sectors, times are indeed bleak. If you work in the Alberta oilsands, it would be hard to imagine a bigger boom.

The Conference Board, for one, said it thinks the sharply rising price of gasoline was the main explanation for the recent drop in consumer confidence. At the end of May 2008, pump prices were up 15 per cent in the past year and almost 30 per cent over the previous four months.

Why would this have such an impact on consumer confidence, given that gasoline accounts for just 4.92 per cent of the consumer price index?

Well, some commuters do buy a lot of gas. But even for those who fill up just once a month, it may just be a case of extreme visibility. What other frequently-bought product has its price displayed on large signs that can be read while driving by?

You may not have noticed the price of bread going up. Everyone, it seems, notices gas.