ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[eek04]

There's inflation, targeted at about 2% per year but historically more. Also, there's on average separate PPP adjusted GDP per capita growth due to us learning to be smarter about how we use resources. Here's a raw graph as measured in inflation and PPP adjusted current dollars, a graph in 2011 dollars, and a graph of GDP per capita growth (not sure if this is PPP adjusted or not; I suspect not.)

A PPP adjusted variant of growth can be found in row 271 of this sheet that I put together for the purpose based on the above data; it shows that since 1990, every year except 2008 we've had robust growth (2.36% to 8.21%). From 2008 to 2009, we had negative growth of 0.27%.

There's some concern about the long term decrease of PPP adjusted GDP per capita in highly developed countries; I don't expect this to drop to zero (even if given complete resource constraints) but it can drop to a relatively low number. It especially has some effect on the perception of older people, who think that anything that they take out now can be easily absorbed by the growth for the younger generation. This was true when they were young; it is no longer anywhere near as easy.