Small businesses are worried about the future. How worried are they? According to the National Federation of Independent Businesses (.pdf), they reported that sales in April were, on average, the best since December 2007 -- when the recession technically began. But their sentiment still declined. Other factors, especially rising prices, make their prospects look bleak.
Let's start with that sentiment. It declined just a bit in April, according to the NFIB. The firm says that this was really more of an aftershock following last March's plummet in confidence. You can see this from the chart:
In April, sentiment was at its lowest level since September 2010. That's really not good, as the index has shed most of the progress it made during the fall and winter.
As mentioned, this isn't because most firms are actually doing worse, but because they expect to do worse. This chart, which shows actual sales experience for the firms the NFIB surveyed versus their expected sales, sums up this phenomenon pretty well:
Generally, expectations rise when sales improve. You have to go back to May 2010 to find another month where expectations fell when sales improve. And this wasn't just any month for better sales. The sales index rose by the most since April 2010 and was the highest since the recession began in December 2007. Still, expectations worsened. The NFIB also reports that earnings improved in April.