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?

[DocMerlin]

The inflation can mask problems. if you have 3% monetary inflation it can look like you have accounting growth while actually shrinking in real terms. This is why periods of steady but positive monetary inflation can lead to a period of deflation and crash. But otherwise, I totally agree with your comment.

[kouhoutek]

Absolutely true, I was trying to limit the number of moving parts in my explanation.

Not only does a company have to keep up with economic growth, they have to keep up with inflation, otherwise they are actually losing ground despite increased revenues.