American Express’ affluent cardholders began spending more freely in the fourth quarter of last year, with spending on AmEx cards jumping 8% year over year. This increase was seen across all customer segments and geographies, but was especially fueled by millennials and Gen Z users, whose transaction volumes jumped 16%. Older groups, such as Gen X and baby boomers, were more restrained in their spending.
Younger Americans tend to spend more on experiences rather than goods, which is reflected in AmEx’s results. Travel and entertainment billings rose 11% in the quarter, with airline spending increasing by 13%.
Despite reporting earnings and revenue that were in line with analysts’ expectations, AmEx shares fell over 2% in midday trading. However, analysts remain optimistic about the company’s future growth potential, with William Blair analysts noting that accelerating billings growth will be a key factor in meeting revenue targets.
Overall, AmEx’s strong performance in the fourth quarter and the continued elevated transaction levels in the beginning of this year have generated optimism for future growth. Younger customers, in particular, are driving spending increases, providing a positive outlook for the company’s revenue growth.
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