Amex Q3 Report: Gen Z & Millennials Fuel 36% of Card Spend Growth

American Express recently unveiled its third-quarter earnings report, signaling a period of robust growth, particularly driven by an increasing engagement from younger consumer demographics. The financial giant reported a significant surge in card spending, with Generation Z and millennial cohorts emerging as pivotal contributors to this upward trajectory. This detailed analysis delves into the key highlights from American Express's Q3 performance, exploring the strategic initiatives that underpinned this success and the demographic shifts influencing the premium payments landscape.

Overall Performance and Strategic Imperatives

During the recent conference call with analysts, American Express CEO Steve Squeri highlighted an impressive 9% growth in overall card spending. This momentum was notably bolstered by strong performances across various retail categories and a significant rebound in travel spending. A key strategic move that defined the quarter was the launch of the refreshed U.S. consumer Platinum Card and Business Platinum Card. Squeri emphasized that these premium offerings reinforce American Express's leadership in the high-end market, with initial customer demand and engagement surpassing internal expectations. The Platinum Card franchise alone, globally, accounts for an astounding $530 billion in annual spend, underscoring its enduring value and market impact.

Furthermore, the company's financial health remained stable, with the percentage of card member loans past due holding steady at 1.3%—a rate that has shown consistency over several preceding quarters. This stability, coupled with strategic product enhancements, paints a picture of controlled growth and effective risk management within a dynamic economic environment.

The Ascendancy of Younger Consumers in Card Spending

One of the most compelling narratives from American Express's Q3 report is the burgeoning influence of younger generations. Chief Financial Officer Christophe Le Caillec provided insightful statistics, revealing that Millennials and Gen Z collectively now account for a substantial 36% of total card spend. This figure remarkably matches the share held by Generation X, signaling a significant shift in consumer spending power. The spending across these younger cohorts experienced a vigorous 13% surge, indicating not only increased card usage but also a higher average number of transactions per U.S. customer—approximately 25% higher than older demographics.

This growing engagement from younger cardmembers is not merely quantitative but also qualitative. Le Caillec noted that the credit profiles of consumer applicants following the Platinum Card refresh have shown improvement, with the average FICO score increasing by 15 points. This suggests that American Express is attracting not just more, but also financially robust, younger consumers, further solidifying its market position and credit quality.

Key Growth Metrics Among Young Demographics:

• Gen Z and Millennials now represent 36% of total card spend, equivalent to Gen X.
• Spending across these cohorts surged by 13%.
• Average transactions per U.S. customer are about 25% higher than older cohorts.
• New applicant FICO scores improved by 15 points post-Platinum Card refresh.

Segment-Specific Growth and Financial Indicators

Beyond the broad generational trends, American Express reported strong growth across specific spending categories. Retail spending, for instance, saw a 12% increase, with restaurant expenditures alone climbing by 9%. The premium travel and entertainment (T&E) sector also demonstrated robust momentum, particularly in front-of-cabin airline tickets, which saw a 14% rise. These figures underscore a continued appetite for discretionary spending and high-value experiences among American Express cardholders.

From a broader financial perspective, U.S. consumer and small business delinquency rates were reported to be below 2019 levels, reflecting a healthy credit environment. In tandem with increased spending, loans and card receivables experienced a 7% gain, indicating a growing portfolio and consistent customer borrowing behavior. Even small business spending, a critical segment for economic vitality, showed encouraging growth of 4%.

Future Outlook and Economic Perspective

Looking ahead, American Express anticipates a full-year revenue growth of 9% to 10%, a projection that underscores the company's confidence in its strategic direction and market performance. Squeri, while acknowledging the inherent uncertainties, expressed cautious optimism regarding the sustained spending momentum. He noted the relative stability observed over the past six to seven quarters and indicated no immediate signs of a slowdown or decline in billings.

Squeri also offered a nuanced perspective on the broader economy, reiterating that American Express's card base is not fully representative of the general U.S. population. He described the economy as "bifurcated," emphasizing that American Express primarily serves a more premium cardholder base. This segment has shown resilience and a slight pickup in spending, a trend the company hopes will extend into the crucial fourth quarter and the holiday season. The strong retail spending, particularly in the U.S. consumer business, is seen as a positive harbinger for holiday sales.

Conclusion

American Express's third-quarter earnings report paints a picture of strategic success, resilient financial health, and a significant demographic shift in spending power. The vigorous engagement from Gen Z and Millennials, coupled with robust growth in key spending categories and disciplined financial management, positions American Express favorably for sustained expansion. As these younger generations continue to mature financially, their influence on the premium payments sector is only expected to grow, making their continued engagement a critical component of American Express's future prosperity.