The CEO of American Express (AXP), Stephen Squeri, claims he is still not observing spending patterns that would indicate a slump is approaching, even though economists may be on recession alert.
After the card industry giant’s fourth-quarter profits were reported, Squeri said to Yahoo Finance, “We aren’t seeing recessionary signals.” The company beat Wall Street expectations in terms of earnings and volume. Sales at AmEx’s consumer services and commercial businesses in the United States increased by 23% and 15% in the fourth quarter. The industry leader in credit cards predicted full-year revenue growth of 15% to 17%. Earnings are anticipated to fall between $11 and $11.40. Analysts anticipated $10.52.
“The only thing that we saw in the fourth quarter was a small business, some decrease in spend, not as much growth in spending, really in digital advertising, so we’re going to watch that. I’m not sure what that’s a function of right now – whether it’s a function of the economy or confusion on where to advertise right now… there is a lot going on in technology right now. We’re going to watch that, but the consumer is really strong, travel bookings are up over 50% vs pre-pandemic…. T&E spending is still really strong with the consumer…. We’re feeling good,” Squeri added.
The shares of American Express rose by about 10%
AmEx’s optimistic prognosis follows strong sales patterns so far in January at Visa and Mastercard, both of which released their quarterly financial results this week. Squeri’s optimistic economic outlook mirrors that of several CEOs during this earnings season, such as Brian Moynihan of Bank of America, who called American consumers “resilient” in a Yahoo Finance Live interview.
Although BofA believes there is a “mild” recession, Moynihan pointed out that consumer spending has been strong since to start of 2023. “They’re spending nicely,” Moynihan added. “The money in their accounts continues to be solid.” This week’s release of quarterly earnings from credit card giants Mastercard (MA), Visa (V), and American Express (AXP) provided another proof that consumers are still doing well despite rising inflation and roiling recessionary fears.
The shares of Mastercard did not change much when the company released its earnings on Thursday before the market opened. Following its quarterly earnings release on Friday, American Express shares rose by about 10%, while Visa stock increased by around 2%. Results from these businesses come as concerns about an upcoming recession in the United States and overseas continue to dominate investor discourse. According to the most recent estimate of GDP growth released on Thursday, the U.S. economy finished 2022 in a better position than anticipated.
