American Express Reports Continued Spending Strength
American Express (AmEx) is witnessing solid spending from its affluent cardholders, signaling a resilient economic environment as younger consumers contribute to increased transaction volumes. According to Chief Financial Officer Christophe Le Caillec, the positive trend in spending that began last year has persisted into the first quarter of 2025. The company recorded a 6% increase in billed business on its cards, which adjusts to a 7% growth when accounting for the leap year phenomenon.
April’s data reflects a continuation of these spending trends, even in the face of recent stock market drops and concerns surrounding potential recession risks stemming from tariff policies. This robustness in spending allowed American Express to surpass profit expectations for the first quarter. The affluent demographic of AmEx’s customer base appears to safeguard the company from widespread economic concerns, including inflation and tariff-related anxieties. Conversely, Synchrony Financial, which caters to a broader credit audience, has reported indications of a spending slowdown among its customers.
Le Caillec remarked on the overall stability seen in consumer spending despite the turbulent news environment. The company’s growth is notably driven by its younger clientele. Specifically, millennials and Gen Z cardholders significantly increased their spending by 14% during the reported quarter. In contrast, Generation X and Baby Boomer cardholders exhibited a more cautious approach, with increases in spending of 5% and 1%, respectively.
The CFO noted the challenge in determining whether current purchases are being advanced due to impending tariffs, which might artificially inflate spending volumes. Some small businesses may be adjusting their purchasing strategies to stock up on inventory in anticipation of rising costs linked to tariffs.
Restaurant Spending Stays Strong
An encouraging sign for American Express is the notable rise in restaurant expenditures, which surged by 8%. Le Caillec cites restaurant spending as a key discretionary expense that typically reflects consumers’ confidence levels, as it cannot easily be postponed compared to other purchases.
However, the data indicates a weakness in airline-related transactions, which experienced slower growth. Airline spending showed only a 3% increase, or 4% when adjusted for the leap year, following a robust 13% growth in the previous quarter. This decline may reflect broader concerns affecting the travel industry amid external economic pressures, including tariff uncertainty.
Despite these fluctuations in airline and retail spending, American Express remains steadfast in its financial outlook. The company has reaffirmed its guidance for revenue growth between 8% to 10% and projected earnings of $15 to $15.50 per share for the current fiscal year. Nonetheless, the company has also included a new disclaimer regarding its guidance, highlighting its dependence on the overall macroeconomic landscape.
In summary, American Express showcases resilience within its affluent customer base amid challenging economic variables. The young cardholders are driving significant growth, while discretionary spending, particularly in dining, indicates a robust consumer confidence. Despite some weaknesses in specific sectors like airline travel, the overarching trend for AmEx remains positive as the company navigates the complexities of the current economic climate.
