Amex: Card Spending by Millennials and Gen Z Up 16%

Young consumers are keeping credit card spending buoyant, especially for American Express, which saw millennials and members of Generation Z increase their spending by double digits year over year in the fourth quarter.

American Express earnings results released Friday (Jan. 24) revealed that total billed business, which represents cardmember spending tied to transactions and card advances, was up 8% year on year to $376.7 billion on an FX-adjusted basis, a pace outmatched by consumer spending in the United States, where that metric was up 9%.

Drilling down a bit, the company said spending by millennials and Gen Z, at 34% of U.S. consumer spending, was up 16%. By way of contrast, spending by other, older cohorts was up mid-single-digit percentage points.

Results also revealed that commercial spending was on the upswing in the fourth quarter, where year-over-year growth was 4%. Spending by U.S. small- to medium-sized businesses (SMBs) was 3% higher, and spending by U.S. large and global businesses was 7% higher.

American Express CEO Steve Squeri said on an earnings call with analysts that billings growth was underpinned by “robust holiday spend.”

“We’re confident that we will continue to bring in large numbers of new premium customers, especially millennial and Gen Z consumers and small businesses, while also maintaining high growth across our international business,” he said.

Fee-based consumer premium cards are among the fastest growing cards industrywide, and Squeri said Amex has about a 25% share of these cards, as they are especially popular with younger consumers.

Management guidance assumed 8% to 10% revenue growth in 2025. Investors sent the shares 3% lower at the start of trading Friday.

American Express Chief Financial Officer Christophe Le Caillec said on the call that spending was “broad-based” across travel and entertainment, goods and services, and all customer segments and geographies. Total loans and card member receivables were up 9%.

“Our credit performance continues to be excellent,” he said. “Delinquency rates and write-off rates are stable versus last quarter and are still below levels from five years ago.”

Company results indicated that net write-off rates of card receivables were 1.9% in Q4, compared to 2.1% at the beginning of the year and 2.2% pre-pandemic. Receivables that were more than 30 days past due were 1.3%, compared to 1.3% a year ago and 1.5% pre-pandemic.

Squeri said later during the call that travel spending accelerated with consumer confidence, and, in reference to billings growth, “the basic story here is there is consumer confidence at this point. There is small business confidence.”

SMBs have navigated through periods of inflation and higher interest rates, he said.

“And so, if you look at what’s happened from an [SMB] perspective, during COVID, organic spending went all the way down,” he said. “Coming out of COVID, it really started to ratchet up, and then it sort of normalized a little bit… What I think the story will be with [SMB] is if we can get that back to a 3% organic lift, … you will see [SMB] then be more of a contributor to overall billings than it is right now. So, it truly is an organic story.

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