Recent data from American Express (AmEx) reveals an encouraging trend amongst its affluent cardholders, with spending seeing a notable resurgence towards the end of the previous year. Chief Financial Officer Christophe Le Caillec shared insights with CNBC, noting an 8% year-over-year increase in spending on AmEx cards during the fourth quarter. This upward movement comes on the heels of a more modest growth pattern earlier in the year, highlighting a rebound in consumer confidence and spending habits, particularly among younger demographics like millennials and Gen Z.
The uptick in spending is especially pronounced among younger generations. Millennials and Gen Z cardholders logged a spectacular 16% increase in transaction volumes compared to 12% just a quarter prior. This demographic shift is significant, as it suggests a substantial change in spending priorities. Contrary to the more cautious spending habits observed among older generations—where Gen X reported a 7% increase and baby boomers only 4%—the younger consumers are eager to invest in experiences rather than material goods. This inclination aligns with broader lifestyle trends favoring travel and entertainment, a reflection of changing values in personal finance and consumption.
The preference for experiences over tangible products is underscored by the results from the last quarter, where travel and entertainment-related billings surged by 11%, compared to a mere 8% growth in the goods and services sector. Notably, airline spending has become a major contributor to this trend, with first-class and business-class fares seeing an impressive 19% increase. Such data reveals not only the spending habits of these affluent segments but also illustrates a broader cultural move towards valuing experiences, such as travel, over traditional consumer goods.
Despite the positive trends, AmEx’s shares experienced a dip of over 2% following the latest earnings report, which aligned closely with analysts’ expectations. Nevertheless, the company’s stock has remained strong, reaching a 52-week high prior to the report. Analysts, including those from William Blair, remain optimistic, interpreting the accelerated billings growth as a strong indicator for the company’s capacity to meet its ambitious goal of at least 10% revenue growth in the coming years.
The recent resurgence in consumer spending, particularly among younger Americans, presents a promising outlook for both American Express and the luxury credit card market as a whole. As younger generations continue to prioritize experiences, businesses may need to adapt to these evolving trends to remain competitive. The continuation of elevated transaction levels suggests that consumers are not only recovering from previous economic uncertainties but are also leaning into a future where experiential spending becomes increasingly dominant. As we move through 2025, the trend is likely to illuminate the interconnectedness of consumer sentiment, luxury spending, and broader economic health.