Inside America's Costco economy

Costco’s latest earnings were strong across almost every major metric. But they were particularly strong amongst one crucial demographic: The company’s “Executive Members” now account for a whopping 74.3% of all Costco sales, ticking up slightly from last quarter.

These Executive Members are Costco’s whales — affluent, high-frequency shoppers who pay twice the annual fee and who earn 2% cash back on purchases, which drives them to spend more per trip than regular members. Their dominance increasingly explains both Costco’s business and a key truth about the larger consumer economy.

A spending phenomenon decades in the making

Costco launched the Executive program in 1997, when only a small fraction of members upgraded. Through the 2000s, Executive sales penetration hovered well under half. By the mid-2010s it pushed into the low 60s, and in the 2020s it climbed steadily toward today’s almost 75%. No other metric captures Costco’s transformation as clearly: A retailer once built around broad middle-class value is now powered overwhelmingly by its most affluent, most loyal, most economically insulated members.

You can see their fingerprints all over the quarter. Costco delivered a record $250 million in Black Friday e-commerce orders, a 20% jump in digital comps, and holiday food volumes that bordered on surreal, including 4.5 million pies sold in the three days before Thanksgiving and 358,000 pizzas served over Halloween weekend. They’re price-conscious, clearly, but they’re not distressed. This is celebratory bulk consumption by households with money, SUVs to tote their hauls away, and McMansion-size pantries in which to store them.

Costco’s much-touted price cuts — bacon down to $16.99, three-pound bags of walnuts to $12.99, pot pie below four dollars a pound — play into the same psychology. These shoppers aren’t trading down, just trading smart. And the wealth effect helps explain the strength of their spending. As The Wall Street Journal recently noted, people tend to spend $35 to $50 for every $1,000 their stock portfolios rise — not necessarily because they cash out gains, but because higher asset values make them feel secure enough to spend.

Federal Reserve Chair Jerome Powell described this divide in plain terms earlier this week: “If you listen to the earnings reports for consumer-facing companies that deal with low- and moderate-income people, they’ll all say that we’re seeing people tightening their belts, changing products they buy, buying less. And it’s clearly a thing. It’s also clearly a thing that asset values—housing values and securities values—are high, and they tend to be owned by people at the higher end. Most of the consumption does happen by people who have more means. The top third accounts for way more than a third of the consumption.”

A mass arbitrage opportunity, a wealthy mindset

Costco’s whales are exactly those "top third" people Powell described as driving consumption.

The U.S. housing market may be softening a little in late 2025, yet post-pandemic gains remain huge. Since 2020, the total value of the market has climbed almost 60%, adding roughly $20 trillion in homeowner wealth. Layered on top of that is the enormous advantage enjoyed by households still sitting on ultra-low mortgage rates. Those loans enable arbitrage at scale, with people effectively borrowing at 2-3% while their homes appreciate around 6-10% a year and their stock portfolios deliver returns north of 10%. The big fat spread? It flows right into discretionary spending.

Over roughly the same period, the S&P 500 has climbed about 90%, with the Nasdaq posting similar gains. Consumers with home equity and stock-market exposure — via 401(k)s, IRAs, and brokerage accounts — aren’t just wealthier on paper. They’re wealthier in their own minds and their spending shows it, all the more so relative to lower-income Americans. For Costco’s whales, the combination of cheap debt, soaring asset values and strong portfolio returns has translated into real spending power. And that’s worth celebrating with Kirkland Signature Crème Brulee Bar Cake — and perhaps a little Kirkland Signature Champagne Brut, too.