Rich American Express customers spend freely, with one exception

admin — Sun, 20 Jul 2025 00:53:32 +0000

American Express has long benefited from a focus on wealthier customers who appreciate the credit card company’s travel and dining perks.

That has helped insulate the company from concerns over a spending slowdown. In the second quarter, total spending on Amex cards jumped 7%, matching the first quarter and higher than the 6% increase a year ago.

But travel spending in the quarter was weaker than transactions for goods and services, and that’s specifically because airline spending has stalled out, coming in flat from a year ago, American Express said Friday.

Economy class domestic airfare is the source of the weakness, Amex CFO Christophe Le Caillec told CNBC. American Express said spending on premium cabins was up 10% from the previous year and that hotel bookings that cost more than $5,000 were up 9%.

But the weak spot could be of concern given the company’s airline partnerships and network of airport lounges, Truist analyst Brian Foran noted.

Airfare prices have also declined, which means consumers are spending less when they buy tickets. Airfare fell 3.5% in June from a year earlier while inflation overall rose, according to the Bureau of Labor Statistics.

Despite beating expectations for second-quarter profit and revenue, and reaffirming its 2025 guidance for those metrics, shares of Amex fell 2.5% in midday trading. Year to date, the company’s shares have climbed less than 4%, trailing most other financials like JPMorgan Chase and Citigroup.

That’s mostly over investor concerns about the spending on rewards programs that Amex has to do as it launches a refreshed Platinum card, Foran said. The company faces increased competition in the premium card space from JPMorgan, Capital One and Citigroup, he said.

“The bear narrative is they have to push harder and harder to get growth, spending more to get more,” Foran said.

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American Express cardholders still spending despite Trump tariffs

admin — Sun, 20 Apr 2025 20:12:06 +0000

American Express‘ affluent cardholders are showing few signs of curbing their spending, and younger customers drove growth in first-quarter transaction volumes, Chief Financial Officer Christophe Le Caillec told CNBC.

Billed business on AmEx cards rose 6% in the period, or 7% when adjusted for the impact of the leap year, the company reported Thursday, which shows that the bump in spending late last year continued into 2025, according to Le Caillec.

Those trends have continued into April, the CFO said, despite sharp declines in stocks this month amid concerns that President Donald Trump’s tariff policies will cause a recession.

The dynamic, which helped AmEx top expectations for first-quarter profit, shows that the company’s wealthier customer base may help to insulate it from concerns about tariffs and stubborn inflation. On the other end of the credit spectrum, Synchrony Financial, which offers store cards for dozens of popular retailers, has warned of a spending slowdown.

“There’s a lot of stability and strength, despite the news and the environment,” Le Caillec said.

Growth at AmEx came from younger cardholders, with millennial and Gen Z members spending 14% more in the quarter. Gen X and Baby Boomer cardholders showed more caution, registering 5% and 1% increases, respectively.

Le Caillec said it’s difficult to discern whether cardholders were pulling forward purchases because of the looming tariffs, creating an artificial boost to purchase volumes, as JPMorgan executives said last week. But some small businesses may be doing so to build inventory because of concerns about the duties increasing costs, he added.

Airline slump

One category in particular gave Le Caillec confidence that the spending trends may be durable.

“Restaurant spend is up 8%,” the CFO said. “This is the ultimate discretionary expense, it’s not something you can bring forward, and so it’s really a good indicator of the strength of our cardmember base and the confidence they have.”

If there was a weak area besides the spending slowdown from older Americans, it was in airline transactions, according to the company’s earnings presentation. The category grew just 3%, or 4% when adjusted for the leap year, after climbing 13% in the fourth quarter.

But while airlines, retailers and other corporations have pulled their earnings guidance on tariff uncertainty, AmEx was holding firm.

It maintained its guidance for revenue growth of 8% to 10% and earnings of $15 to $15.50 per share this year, Le Caillec said.

In the company’s presentation, though, it added a new caveat to its guidance: “Subject to the Macroeconomic Environment.”

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Rich American Express customers spend freely, with one exception

American Express cardholders still spending despite Trump tariffs

Airline slump