American Express Affluent Cardholders Spent More Freely in 4th Quarter
Spending on American Express cards surged 8% in the fourth quarter, following a slowdown in earlier quarters, said Chief Financial Officer Christophe Le Caillec. The increased spending was fueled by millennials and Gen Z users, with transaction volumes jumping 16%, compared to 7% and 4% increases for Gen X and baby boomer cardholders, respectively. The 16% increase is a significant acceleration from the third quarter’s 12% rise.
Elevated transaction levels have continued into the first three weeks of 2023. Le Caillec noted that younger Americans are more likely to spend on experiences rather than goods, which is reflected in AmEx’s results. The company’s billings for travel and entertainment rose 11%, while spending on good and services grew 8% in the fourth quarter.
Travel was a major driver of spending growth, with airline spending up 13% year over year, and spending on business class and first class airfares rising 19%. Despite these encouraging results, AmEx shares fell more than 2% on Friday, partly due to expectations being exceeded but revenue being slightly below expectations.