ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / NEWS

Costco Reveals Changes In Buying Patterns Amid Impending Recession Fears

Costco CFO Richard Galanti said that these behaviors are indicative of the coming recession.
UPDATED JAN 22, 2024
Cover Image Source: Getty Images |  Eric Thayer
Cover Image Source: Getty Images | Eric Thayer

Customers are avoiding expensive beef products and buying cheaper meats like pork and chicken. They are also putting in their carts cost-efficient canned meat and fish products, Costco executives recently told investors. These changes in shopping habits are sending tell-tale signals that a recession is on the way, the executives said, as per Business Insider.

Costco's in-house brand Kirkland saw growth in sales in this quarter as these products are cheaper than other national brands. Sales of big-ticket items like TVs and refrigerators have also seen a dip. The average daily transaction at Costco was down by almost 4.2% worldwide and 3.5% in the US during this quarter. 

Costco CFO Richard Galanti said that these behaviors are indicative of the coming recession as these same signs had emerged during the past economic downturns.

Many customers are also turning to dollar stores in their efforts to combat inflation. Both Dollar Tree and Dollar General have reported growth in their sales in recent times.

Is a Recession Inevitable for The US Economy?

Cover Image Source: Pexels | Lukas
Cover Image Source: Pexels | Lukas

It's been some time since Americans have been told that recession is around the corner. There are three key indicators of an economic downturn. According to the Bank of America, reported by Market Insider, two of those three signals have already surfaced and it could turn into a nightmare for the stock market. 

"The stock market is ignoring the risk," the bank said.

So what are these three signals?



 

1. Yield curve steepening 

"Yield curve steepening after inversion tends to precede big lows in the stock market," Bank of America said. "Get defensive as the yield curve steepens."

This curve measures the difference between the short-term and the long-term US Treasury rates. Currently, short-term rates are yielding more which is unlike norms. 

2. Tighter credit conditions 

The Bank of America said, "The Fed's quarterly Senior Loan Officer Opinion Survey has tracked bank willingness to lend since the 1960s. It is flashing warning signs. Lending standards have never gotten this tight without leading to or coinciding with a recession. Credit conditions typically turn negative about a year before a buyable low in the market. December 2022 saw the first credit tightening since Covid, and conditions have worsened since then." 

3. The Fed Forced To Cut Interest Taxes

"Several Fed cuts to start easing policy have been unabashedly bearish signals. Recessionary bear markets typically see 25% more downside after the Fed's first cut," the bank said

Change In US Consumer Behavior 

Pexels | Olena Bohovyk
Pexels | Olena Bohovyk

According to a report by McKinsey & Company, the US is optimistic about the country's economic future. Having said that the report also highlights how more and more consumers and tightening their spending and not going on shopping sprees. While consumer sentiment remains mixed, there is an uptick in optimism as 36 percent of US consumers expect a quick economic rebound. 

How Will an Upcoming Recession Differ From That of 2008?

According to Morgan Stanley, the possible recession could be pandemic-induced and also credit driven. Due to this difference, experts at the International Monetary Fund (IMF) predict that the new recession could be shallow and short-lived. 

Key Takeaways For Businesses

Market Your Product Accordingly: As consumers tighten their budgets, it's important for the business to market their products the right way and also choose the right products that offer value. Remember, consumers can always be persuaded to buy a product, regardless of any situation.

Cost Cutting Where Needed: There's always an opportunity to reduce expenditure, you just need to look for it. Think of excess as spending and work on that.

RELATED TOPICS COSTCO
MORE ON MARKET REALIST
Dwyane 'the Rock' Johnson said that his friend's actions changed the course of his life.
5 hours ago
The Texas inventor pitched a generator named after him on the third season of Shark Tank.
21 hours ago
Despite putting the contestant in an awkward position the host did get the audience to laugh.
1 day ago
Although fans have admired his energy on the episode for years, Paul revealed why he wasn't too happy.
1 day ago
It took more than a decade and an amazing invention for Les Cookson to secure a deal on Shark Tank.
1 day ago
The contestant was also defended by some who said they would've made the same mistake.
2 days ago
While the item received a record-breaking appraisal, a flaw prevented its value from going higher.
2 days ago
She has starred in classic films such as "Sixteen Candles", "The Lost Boys", and "Twister".
2 days ago
What is Judy Sheindlin’s salary per episode? Here’s what we know about the TV judge and her new IMDb TV show, ‘Judy Justice.’
3 days ago
Sajak was criticized by fans on the internet but the contestant clarified that it was just for fun.
3 days ago
Danielle Perez had gone viral after talking about the awkward moment on "The Price is Right" on social media.
4 days ago
The singer also got Malone's number but is only focusing on sharing his work with him for now.
4 days ago
The incident did not bring down the woman's excitement as she kept jumping on stage.
4 days ago
The guest had no idea whose face was engraved on the top of the box and how much it cost.
5 days ago
The young entrepreneur saw a common problem kids his age faced and came up with an invention.
5 days ago
It was a gift from the father of his first client to whom he had sold a condo.
5 days ago
The singer wanted to celebrate his journey by sending fans to the place linked to his early days.
5 days ago
Wait till you hear the list of weird prizes that 'Price is Right' gave in the '50s.
6 days ago
The bottled water from the popular retailer has nanoplastic particles more than the firm's limits.
6 days ago
Most of the sharks had concerns about water pressure even though the product impressed them.
6 days ago