Towards the end of last year, American Express (AmEx) witnessed a significant resurgence in spending among its cardholders, as highlighted by Chief Financial Officer Christophe Le Caillec in a recent interview with CNBC. The year-end statistics revealed an impressive 8% increase in card transactions compared to the previous year. This uptick follows a period of tapering growth rates earlier in the year—7% in the first quarter, then down to 6% during the second and third quarters. The renewed enthusiasm for spending was observed across various demographics and geographical regions; however, it was predominantly propelled by the younger generations, particularly millennials and Gen Z.
Younger Generations Drive Spending Trends
A striking 16% increase in transaction volumes was reported among millennials and Gen Z cardholders, a notable rise from the previous quarter’s 12%. In contrast, older generations displayed more conservative spending patterns: Gen X managed a 7% increase in the same quarter, while baby boomers only experienced a modest 4% rise. Le Caillec expressed optimism about this spending pattern, suggesting that the robust growth among younger consumers holds promise for AmEx’s strategies in 2025. The sustained spending momentum noted at the beginning of the year further reinforces this positive outlook.
A unique characteristic of younger Americans is their tendency to prioritize experiential spending over material goods, aligning with broader lifestyle changes. This shift is well-reflected in American Express’s earnings, as travel and entertainment expenditures surged by 11%, greatly outpacing the 8% growth observed in spending on goods and services. Airline expenses led the adventure, showing a significant 13% increase, with business class and first-class airfare witnessing a striking 19% hike.
Despite these encouraging figures, AmEx’s stock experienced a decline of over 2% shortly after the earnings release—a response attributed to earnings and revenue figures that, while meeting analyst expectations, did not exceed them. On a more positive note, AmEx shares have seen an upward trajectory throughout the year, having reached a 52-week high recently. This paradox of solid performance yet stock market skepticism reflects the high expectations placed on the company, as it works to maintain and build upon growth trends.
William Blair analysts, led by Cristopher Kennedy, have emphasized the importance of accelerating billing growth as a critical component in achieving AmEx’s ambitious target of 10% revenue growth. This insight underscores the competitive pressures within the high-end credit card market, dominated by AmEx and its rival JPMorgan Chase.
As we look ahead, the trends showcased by American Express provide crucial insights into consumer behavior, especially among younger generations who are redefining spending priorities. With a strong emphasis on experiences, companies will need to tailor their offerings to resonate with this demographic’s preferences. As AmEx navigates this shifting landscape, the importance of fostering relationships with millennial and Gen Z consumers will likely play a pivotal role in driving sustained growth and ensuring market leadership well into the future.