Chief Financial Officer Jeff Campbell reportedly said: “The question is: Where does the economy go over the next six to 12 months?”
He said there could be additional economic woes as large companies’ pledges to avoid job cuts in 2020 run out. American Express itself made that pledge.
“Have we had the main shock of unemployment and stress on the small businesses, or are you going to see further shocks?” he asked in a virtual investor conference on Wednesday (June 3).
Meanwhile, American Express is seriously retrenching, and has pulled back on adding new credit card customers. Campbell said that is because the company can’t get a clear picture of consumers’ financial health or employment trends.
The company has also increased its loan-loss reserves.
Nonetheless, Campbell said, AmEx’s attrition rates have held steady throughout the crisis. That has helped to boost the company’s card fee revenue, which is expected to go up by a percentage in the “mid-teens” this quarter, he noted.
Unemployment rates have skyrocketed under the COVID-19 crisis.
The good news: The federal government has been hard at work and has paid out unemployment benefits at an unprecedented level over the last three months. As reported by PYMNTS, the Feds disbursed a three-month record of $146 billion in unemployment benefits. That’s more than all of 2009, when jobless rates skyrocketed in the wake of the Great Recession’s fiscal meltdown.
However, Bloomberg calculations estimate that the total in jobless payouts are now short by $67 billion, which means many of the unemployed simply aren’t getting what they’re owed.
As reported by PYMNTS, the news about the economy is somewhat of a mixed bag. Yes, the nation’s manufacturing sector fell to an 11-year low in May. On the other hand, other indicators suggest the worst may be over, according to the Institute for Supply Management (ISM). The ISM also said the sector showed signs of stabilizing in May, which was considered a transition month between closed and reopened factories.