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Macy’s and Costco issue recession warning…

New York CNN—Macy’s, Costco and other big chains say shoppers are pulling back at their stores and changing what they buy. That could be a red flag for the US economy.

Macy’s (M) on Thursday cut its annual profit and sales forecast after customer demand slowed.

“The US consumer, particularly at Macy’s, pulled back more than we anticipated,” Macy’s CEO Jeff Gennette said on an earnings call Thursday. Customers “reallocated” spending to food, essentials and services, he said.

Gennette said Macy’s would increase its promotions to clear out unsold merchandise.

Same-store sales at the Macy’s sank 8.7% last quarter, while the higher-end department store Bloomingdale’s dropped 3.9%.

Macy’s stock was flat during early trading Thursday.

The company was the latest retailer to highlight shifts in customer demand.

Costco (COST) finance chief Richard Galanti said last week that that some customers were switching from pricier steaks and beef for cheaper meats like pork and chicken. This is a trend that has been common in previous recessions, he said.

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