Layoffs, Price Hikes, & Rising Profits – the State of the American Economy in May 2025

The first four months of 2025 have been an interesting time for the US economy. A slumping stock market, the unveiling of an “America First” trade policy, and persistent inflation (above 2% annually) have made for an up-and-down start to the year

Over the past few weeks, there have been three interesting developments in the American economy that I would like to discuss in today’s article—those three topics being layoffs, price hikes, and record profits for several large companies. Without further ado, let’s dive right into today’s article.

Layoffs

Over the past few weeks, the Tech sector has experienced another massive wave of layoffs that have rocked the industry. For example, the computer chip manufacturing giant Intel just announced that it would lay off twenty-one thousand employees.

Job layoffs are not just a feature of the tech industry. The American population is seeing layoffs across various industries in first four months of 2025. Major financial, energy, entertainment, and travel companies have enacted large-scale layoffs of significant portions of their staff.

Besides the private sector layoffs, the 2nd Trump administration initiated a round of necessary layoffs in the Federal bureaucracy in the first 100 days of 2025. Tens of thousands of Federal workers have already been let go this year, and more planned cuts are likely expected for later this year.

Price Hikes for the Video Gaming Industry

American citizens endured multiple years of high inflation under the Biden administration. Now with a new presidential administration at the helm, many Americans believed that inflation would finally be behind us. After all, the inflation rate has slowed down significantly since President Donald Trump took office for the 2nd time in January this year—from roughly 3% in January to about 2.4% in March 2025 according to the Consumer Price Index (CPI).

While inflation in the overall economy is not a high as it once was, two major companies in the entertainment industry have recently announced major price hikes for its products. The culprits here none other than Nintendo and Microsoft (i.e. Xbox). Both Nintendo and Microsoft shared the troubling news that they are going to raise the price for both its video games consoles–the Switch 2 and the Xbox Series S/X systems respectively–and individual video games.

For the past several years, the baseline price for new, major video game releases has been $70. Now, that number will be $80 going forward and potentially more for some games.

With Nintendo and Xbox now moving toward a $80 baseline for video games, many expect video game giant PlayStation to follow suit soon and increase the price for its games, but only time will tell.

As one can probably expect, many consumers have expressed major concern with these huge price hikes. However, these companies have note expressed any concern for the financial strain that these price hikes may cause for their customers.

Massive Profits for Tech Giants

Last month, a couple of tech giants released their quarterly results to the business world. Microsoft and Meta both exceeded investor expectations in their latest quarterly earnings calls. Both companies earned tens of billions of dollars in profit in just the first three months of 2024.

Microsoft and Meta weren’t the only companies that experienced solid earnings in recent months. According to Reuters, “U.S. corporate profits surged to a record high in the fourth quarter” in 2024. These continued profits across major US Corporations continued through the first quarter of 2025—with many S&P 500 public companies exceeding earnings expectations for Q1 2025.