Ground beef averaged about $6.70 per pound in March 2026, a record high, and the US cattle herd has shrunk to its smallest in 75 years. The squeeze is showing up inside Costco warehouses — but the company's management isn't sounding the same alarms it did three years ago.
A shifting protein playbook
During Costco's May 2023 earnings call, then-CFO Richard Galanti noted that shoppers had started moving from beef to cheaper proteins like chicken and pork. He pointed to similar slowdowns in 1999, 2000, and 2008–2010. That kind of trade-down is a classic sign that budgets are getting tight.
Galanti stepped down as CFO in March 2024. His successor, Gary Millerchip, has not repeated that warning in recent earnings calls. Instead, Costco reported consistent member spending in its Q1 and Q2 fiscal 2026 calls, with higher-priced meat cuts actually growing faster than cheaper options.
So either consumers are still willing to pay up, or the real pinch hasn't hit yet.
What's driving the price spike
Live cattle traded near $2.58 per pound in March 2026. The US herd has fallen to a 75-year low after years of drought and rising feed costs. Fewer animals means less supply, and that pushes prices up at the meat counter.
President Trump delayed an executive order in May 2026 that would have eased beef-import limits to help bring prices down. That means imported beef won't fill the gap anytime soon.
For Costco shoppers, the sticker shock is real. But the company's own data suggests shoppers haven't bolted for cheaper cuts yet.
Cardboard boxes and recession odds
Outside the grocery aisle, other numbers are flashing yellow. US cardboard box production fell more than 8% in the first quarter of 2026. Historically, drops like that have preceded a US recession. Boxes are a basic input for everything from e-commerce to packaged food, so a sharp slowdown means manufacturers and retailers expect fewer goods to move.
Goldman Sachs upped its 12-month US recession probability to 30% in March 2026, citing oil shocks and tighter financial conditions. The bank doesn't see a recession as certain, but the risk has doubled from where it stood a year ago.
Betting markets are more measured. Polymarket odds for a US recession by the end of 2026 hover near 23%, well below the panic readings earlier this year when trade tensions peaked.
For now, Costco's customers are still buying the expensive beef. But with record prices, a shrinking cattle herd, and a stack of recession indicators, that behavior could flip. The next earnings call from Gary Millerchip will be closely watched to see if the tone changes — and whether the trade-down Galanti flagged in 2023 finally arrives.
