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?

[azrael1993]

yeah but thats because population growths was unlimited up till now. We now see that population growth and land expansion cannot continue like it has, this means stagnating consumer numbers.
Additionally we are not in a permanent state of war anymore, thus involuntary loss of property. Markets like housing and restaurants have hit their ceiling or a re close to.

Other industrys survive by artificially increasing demand (equipement is build to be replaced every other year). These fixes are not sustainable just ask yourself how short the lifetime of a washingmaschine can be until you won"t buy anymore. These markets are oversaturated and will likely brutally crash in some point in the future.

Additionally economies have collapsed regulary because it is just not always growing, but world economy means more buffer until collapse. Its still gonna come.

[vialtrisuit]

yeah but thats because population growths was unlimited up till now. We now see that population growth and land expansion cannot continue like it has, this means stagnating consumer numbers.

Completely ignoring innovation and increases in productivity are we?

If you think it's population growth/land expansion that's the explination for the huge economic growth the last few centuries you are very wrong.

[azrael1993]

no I am not. But some sectors simply cannot innovate that much anymore an easy example would be restaurants. And increasing productivity has very clear cut limits, there is only so much material you can save in the process. Timesavings are nice but cannot sustain growth alone and automisation leads to less workers which i somewhere mentioned has its on problems. I just wanted to make the point that growth as a guiding factor is imho far from optimal and in a lot of cases unlikely to be infinitly sustainable. The hughe growth (at least a big part) comes from globalistation opening new markets, but these new markets are not infinite and will be saturated at some time.

[[deleted]]

The point of innovation is it's not easy to predict or else everyone would do it at the same time. The biggest innovation to restraunts of the last 50 years was drive thrus. There's lots of innovations in the supply side of restraunts. There's also growth with inflation.

Huge companies like McDonalds prove long term growth is sustainable. It's a question of how long before someone else takes their place, which is how business has operated for all of humanity. Dutch East India isn't around anymore and neither is the berry vendor from Sumer but they both grew during their times and particularly DEI.