American Express: Millennial and Gen Z Spending Growth Up 39%

For American Express, there’s been no slowdown or pullback by consumers, who continue to wield their cards at registers and online checkout pages with enthusiasm.

Especially younger consumers.

CEO Steve Squeri said on the conference call with analysts that card member spending “remained at near record levels in the quarter … As we sit here today, we see no changes in the spending behaviors of our customers, and our credit metrics continue to be strong with delinquencies and write-offs remaining at low levels even as loan balances are steadily rebuilding.”

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Billed business, which represents member spending including cash advances, on payment products issued by American Express — was up 24% on an FX-adjusted basis to $339 billion.

The company added 3.3 million new proprietary cards in the quarter — and Millennial and Gen Z consumers represented more than 60% of new card acquisitions, management said on the call to discuss results.

Squeri said, with a nod to younger consumers, “the whole concept of generational relevance in bringing people into the franchise early and bringing them in on a premium product that they can really embed their lives into has really helped us out tremendously — as opposed to bringing them in on a fee-free product and then trying to upgrade them along.”

Double-Digit Spending Increases

Spending on goods and services was up 16% year on year.

And he noted that spending within the travel and entertainment verticals “has exceeded our expectations throughout the year.”  Spending in that vertical, he said, was up 57% from a year earlier. Spending in the company’s international market has exceeded pre-pandemic levels and there continues to be a rebound in business-related travel.

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The CEO noted that spending on its Resy reservation platform — and users have tripled since the acquisition of the platform to reach 35 million.

In answer to questions on whether that spending is sustainable, Squeri said that “when we look at our consumer travel booking, we see higher bookings than we’ve seen in a long, long time … people ask, what does the holiday season look like? Well, the holiday season, from a travel perspective, looks really, really strong, because people are booking three months out. And if you’re going to be traveling, you’re probably going to be going to restaurants. And if you’re traveling in some place, you’re probably bringing presents with you as well. So we don’t see anything really changing over the next three months.”

CFO Jeff Campbell said in his remarks that billed business was up 30% over pre-pandemic, 2019 third quarter levels and is further evidence of younger consumers’ enthusiasm, Millennial and Gen Z customers’ spending grew 39% year-over-year this past quarter.

Management noted that credit quality remains strong, as write-off rates remain lower than pre-pandemic loans. In supplemental materials released by the company, overall reserves for loan losses were 3.2% of total loan balances, down from about 7.3% at the end of 2020.

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