Employees always know what's going on. You can't hide the truth from the people who directly experience it every day. And these people talk.

I'm always amazed when managers feel the need to keep upbeat and "dispel the rumors" to the exact people who started the "rumors." Even as a developer, I have excellent insight into customers. I remember working for a company whose product usage fell off of a cliff. I certainly noticed how loads on our servers fell long before the sales team got additional training to combat the falling renewal rates or before the layoffs hit.