In 2025, affluent consumers have been on a spending spree, driving a notable surge in debt that has benefitted financial giants like American Express. The New York-based company, with a legacy spanning 175 years, recently reported a robust financial performance for the first quarter, showcasing the resilience of its premium customer base amid a choppy economic landscape.
American Express’s total revenue reached $17 billion after accounting for interest costs, marking a 7% increase from the previous year. This impressive growth can be attributed to an uptick in customers carrying balances on their credit cards, alongside higher spending and increased card fees. The company’s earnings per share (EPS) rose to $3.64, a notable 9% rise year-over-year, while provisions for credit losses slightly decreased to $1.2 billion compared to $1.3 billion a year earlier.
CEO Stephen J. Squeri attributed this success to the strength and loyalty of their premium clientele. “Our performance across key areas, including Card Member spending, customer retention, and demand for our premium products, continued to be strong,” he stated, expressing confidence that this upward trajectory would persist. The company maintains an optimistic full-year guidance, projecting revenue growth of 8–10% and EPS between $15.00 and $15.50, dependent on macroeconomic conditions.
The positive financial results from American Express resonate with broader retail sales data released by the Department of Commerce, which indicates that consumer spending—responsible for nearly two-thirds of the nation’s GDP—remains a vital engine for economic growth. Georgios Koimisis, an associate professor of economics and finance at Manhattan University, emphasized that American Express’s performance underscores the strength of consumer spending among affluent customers. “The company continues to benefit from a loyal, high-spending customer base,” he noted, reinforcing the notion that wealthier consumers are less impacted by economic fluctuations compared to their less affluent counterparts.
However, while American Express celebrates its growth, various consumer sentiment surveys, including those from The Conference Board and the University of Michigan, paint a contrasting picture, revealing concerns about declining consumer confidence. Chartered financial analyst Michael Ashley Schulman remarked on American Express’s unique business model, which provides a buffer against economic turbulence. Unlike many of its competitors, the company relies less on swipe fees; instead, a significant portion of its revenue stems from annual card fees, creating a more stable, subscription-like revenue stream. “With average fees at $108 and premium Platinum fees at $695, there’s considerable potential for growth in this high-margin area,” he explained.
Despite these advantages, Schulman cautioned that American Express is not entirely insulated from economic uncertainty. The rising consumer debt, highlighted in a recent Federal Reserve Bank of New York report, poses a significant risk. Many cardholders are opting to make minimum payments, adding to their existing debt burdens, which also encompass mortgages and car loans. This accumulation of debt could eventually dampen spending power, particularly as inflation continues to affect overall economic sentiment.
Koimisis echoed these concerns, pointing to the company’s soaring operating expenses linked to increased spending on customer rewards, travel services, and general business operations. “Given the current uncertainty, this pattern may persist while costs remain high, placing downward pressure on profit margins,” he cautioned.
As American Express navigates this complex economic landscape, its ability to sustain growth amidst rising consumer debt and fluctuating sentiment will be crucial. With a strategic focus on its premium offerings and disciplined expense management, the company seems poised to weather potential storms, but the road ahead may require careful navigation of the delicate balance between growth and sustainability. The interplay between affluent consumer behavior and broader economic indicators will undoubtedly shape the future for American Express and the financial landscape as a whole.
