Managers are interested in the economy. So, they look at the gross domestic product (GDP), which is the broadest gauge of economic output. The United States Bureau of Economic Analysis (BEA) reports on GDP. The bureau defines real gross domestic product as the output of goods and services produced by labor and property located in the United States. BEA released its first-quarter 2012 advance estimate of GDP August 27, 2012. The New York Times prepared a chart based on that report and previous reports, as seen below. Recession and recovery or growth can be seen in the chart. According to the U.S. National Bureau of Economic Research , the worst recession since the Great Depression of the 1930s began in December 2007 and ended in June 2009. A recession is a period of declining real GDP and rising unemployment. During the recession real GDP dropped by ~3 % and unemployment rose from 4.7 % to 10 %. The recession (2007-2009) included a housing bubble, financial system losses, and a commodity boom. From 1995 to 2007, the U.S. housing market was booming, which encouraged many households to borrow money to buy real estate. Some of these new homeowners' loans were subprime. In other words, given their down payments, incomes and credit histories, they were at a high risk of loan default. Since 2007, many of the new homeowners found themselves underwater , owing more on their mortgages than their houses were worth. As a result, mortgage defaults and home foreclosures increased. In 2008, the financial institutions that held these subprime mortgages faced large losses. Bear Stearns was purchased by JP Morgan Chase Fannie Mae and Freddie mac were taken over by the U.S. government Lehman Brothers declared bankruptcy Bank of America purchased Merrill Lynch American International Group (AIG) received $85 billion from the federal government JP Morgan Chase purchased Washington Mutual, the biggest bank failure in history In July 2008, oil peaked at $147.30 a barrel and a gallon of gasoline was more than $4.00 across most of the U.S., driven in part by increased demand from China and other rapidly growing emerging economies. Economic contraction in the fourth quarter caused a dramatic drop in demand. Prices fell below $35 a barrel by the end of the year. Since the second half of 2009, the economy has been growing, coming close to 4 % growth in early 2010. Then growth slowed, but accelerated the rest of the year. The most recent report says that growth has slowed to 2.2 %. How might this affect decisions by managers? Will they increase or decrease production? Will they hire or lay off employees? What other decisions might be affected?