Should You Cut Back on Costco Shopping if a Recession Hits?

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A recession could strike the U.S. economy this year. Read on to see if that should change your Costco habits. 

Recession warnings have been sounding since 2022, and at this point, a lot of people are pretty tired of hearing them. After all, many indicators point to a healthy economy. The unemployment rate is just 3.7%. Jobs are being added to the economy. All told, things just don’t seem that bad.

But economic conditions could worsen this year if the Fed’s persistent interest rate hikes fuel a notable pullback in consumer spending. The Fed has been raising interest rates in an effort to slow the pace of inflation. As such, it’s gotten more expensive to borrow money in just about any form, whether it’s a credit card balance, auto loan, or personal loan.

Consumers may decide they’re tired of sky-high interest rates and instead sock more money away in a savings account to earn a decent return on their cash. But that could actually lead to a recession, even if it’s just a mild one.

Now without a crystal ball, we can’t say with certainty whether a recession will strike this year or not. But let’s say that does happen. During periods of economic decline, it’s prudent to cut back on spending. But should that extend to Costco shopping?

You may want to make changes to what you’re buying at Costco

Costco is known as an affordable source of groceries and household essentials. Those are items you might have trouble cutting back on during a recession. After all, you still need to feed your family and clean your home.

But while you may not have to shop at Costco less frequently during a recession, you might make changes to the specific items you’re buying. It was noted on Costco’s most recent earnings call that shoppers are already starting to purchase less beef, which tends to be a more expensive protein, and are instead shifting over to cheaper alternatives like poultry and pork. And that’s an indication that Costco members may already be worried about a recession — or that they’re gearing up for one.

You may also want to consider trimming your Costco shopping list if a recession strikes. If you normally buy a variety of fruits there, maybe cut one type out to conserve funds. Similarly, if you tend to indulge in Costco’s bakery and snack aisles, you may want to cut back if economic conditions aren’t wonderful.

Hope for the best but prepare for a downturn

You may be frustrated with the persistent recession warnings we keep hearing, but there’s a reason for them. Experts want the public to be prepared in case the broad economic situation deteriorates.

You don’t have to spend your days fixating on a recession or fearing one. But it’s a good idea to boost your savings in case a recession hits. That way, if your job is impacted, you’ll have more cash reserves to fall back on. And it’s also important to be willing to make changes to your spending during a recession — even if it means having to skimp on some of the Costco products you love temporarily.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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