Businesses look to gross domestic product as a planning tool. It helps them to decide whether to expand, to increase or decrease production, to borrow money, to increase or decrease investments, to hire new employees, or to increase or decrease their inventories. It provides information that is useful when planning sales forecasts and budgets.

Growth and contractions in economic activities set off chain reactions in the business world. Within a business, departments are interrelated, and changes in one department call for corresponding changes in other departments. When GDP has not grown, the sales department will probably reduce its sales forecasts, production will then cut back on quantities to be produced, purchasing will then buy fewer raw materials, human resources will cut back on hiring employees or even lay off existing employees, and management will reduce investment in capital goods.

Likewise, a business and its suppliers are also interrelated. Cutbacks for a business usually mean cutbacks for its suppliers as well. For example, if an auto manufacturer cuts back on production, its steel suppliers would also cut back on steel production. Otherwise, the steel plants would end up with excess inventory that would be costly to keep.

When GDP and other economic indicators are on the rise, producers become hopeful about the future, and they buy new equipment, build new facilities, or expand their current operations. This increase in capital-goods investment encourages the expansion of other economic activities. Producers continue to encourage this expansion by increasing their inventory levels so they are prepared for the increase in demand that they anticipate.