This time, it’s the AP’s turn to use the U-word, at least in the headline.  Consumer confidence tumbled in April, not a surprising result for anyone paying attention to rising unemployment claims, rapidly rising gas prices, and the slowdown in durable-goods orders.  The only people apparently surprised by this are the economists:

The Conference Board’s Consumer Confidence Index fell to 60.8 from a revised 66 in April, a sign of the toll that high gas prices, a choppy job outlook and a moribund housing market are taking on people’s psyches. Economists had expected an increase to 67. It was the lowest reading since November.

“Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects,” said Lynn Franco, director of The Conference Board Consumer Research Center. She said fears over inflation, which eased in April, picked up again in May.

The index, released Tuesday, is still far from the reading of 90 that indicates a healthy economy. It hasn’t approached that level since the recession began in December 2007.

Increased worry about income and jobs coupled with high prices are taking a toll on consumers, said Moody’s Chief Economist John Lonski.

They seriously expected an increase?  Durable goods orders dropped 3.6% in April in what should have been a gigantic clue of falling demand.  It would be one thing to be surprised by another reflection of falling demand if it came before the first, but it would only have been “unexpected” had consumer confidence increased while demand fell.

Why are consumers losing confidence?  One big reason might be the increased level of weekly initial unemployment claims seen since mid-April.  On Friday, the Department of Labor will announce May’s unemployment rate, and the indications thus far suggest that the US economy didn’t add many jobs.  On top of that, the valuation of the primary asset of most consumers keeps dropping:

Between March 2010 and March 2011, the market suffered its biggest year-over-year decline in 16 months. Property values in 20 cities fell to their lowest levels since 2003 with a 3.6 percent drop from March 2010 to March 2011, according to new figures from S&P/Case-Shiller.

The figure is slightly worse than 25 economists surveyed by Bloomberg expected. That group expected a 3.4 perccent drop with a range of 2.8 percent to 4.9 percent.

Nationally, prices sank 5.1 percent in the first quarter from the same time in 2010 and 4.2 percent from the previous three months. It was the biggest one-quarter decrease since the first three months of 2009.

For most people, this doesn’t feel like recovery.  It feels like a continuing recession, which is why consumers are acting like investors and wrapping their arms around their cash.  If this continues for much longer, the real surprise will belong to Barack Obama and the Democrats in the 2012 elections.  These are not “stay the course” figures, and the only real change is that hope is all-too-expectedly dissipating under Obamanomics.

Update: For non-homeowners, the news is also unexpectedly bad.  Get ready for inflation in the rental markets:

For all the attention given to almost $4-a-gallon gas, the biggest threat to containing U.S. inflation may be the shift away from homeownership, which is pushing up the cost of leases across the nation’s 38 million rented residences.

Shelter represents about 40 percent of the consumer price index excluding food and energy and accounted for almost one quarter of the 1.3 percentage point rise in April. That share has grown as falling home prices shake Americans’ confidence in housing as an investment.

Federal Reserve Chairman Ben S. Bernanke and his colleagues say they will hold interest rates at record lows for an “extended period,” based on an assessment that slack in the economy from 9 percent unemployment will help subdue core inflation and any threat of accelerating prices likely will be “transitory.” Not everyone agrees with that judgment.

“They should have looked at rents,” said Maury Harris, chief U.S. economist in New York at UBS Securities LLC, whose team at UBS was the most accurate inflation forecaster over 2009 and 2010, according to Bloomberg calculations. “They’re putting too much weight on the ‘slack is all that matters’ theory. It matters but, for heaven’s sake, it’s not all that matters.”

That could be long-term good news, however, as residential multi-unit construction could see a rebound if rental prices continue to accelerate.