because the economy influences basi

because the economy influences basic business decisions, such whether to hiremore employees, expand production, or take out loans to purchase equipment, managers scan their economic environment for sings of singnificant change. Unfortunately, the economic statistics that managers rely on when making these decisions are notoriously poor predictors of future economic activity. A manager who decides to hire ten more employees because economic data suggest future growth could very well have to lay off those workers when the economy does not in fact grow. A famous economic study found that at the beginning of a business quarter (a period of only 3 months),even the best economic forecasters could not accurately predict whether economic activity would grow or shrink in that same quarter!