November 10, 2009
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News: American Express Spending Up
A modest sign that the economy is beginning to bounce back is typically measured by overall U.S. credit card spending. Nationally, consumers have continued to reduce spending over the past year; however, one credit card company reported third quarter spending is up for the company. American Express released October figures Tuesday and once again comes up as the number one performer. The company reported a 3 percent increase in card billing from same time last year. AmEx posted third quarter income of $642 million down 21 percent from same time last year while overall credit card spending increased to $156.6 billion up from $151.4 billion for second quarter. This was the highest spending over the past year.
On Tuesday, Kenneth Chenault, American Express's Chairman and Chief Executive, said October's credit card spending increase was the “best we've seen to date.” Although card spending fell 11 percent in the third quarter from same time last year, it showed an improvement against a 16 percent contraction in the second quarter. An optimistic Chenault also noted that real estate values have also shown a slight increase and a partial rebound in stock prices could mean things have bottomed out. Although there are signs that the recession is nearing an end, American Express will continue to put aside a substantial amount of revenue to cover future credit card losses.
Chenault also cautioned that in spite of the company's positive position, we can expect it to grow at a much slower pace than in previous years. The company was the fastest growing credit card company between 2003 and 2007. In the wake of record breaking card defaults, American Express has fared better than other lenders. They are unique in that in addition to issuing cards, the company is its own processing network. At one time all AmEx cards balances were required to be paid in full; however, in an effort to reach to new markets, they began to offer cards where customers can carry a balance. It was a move that proved to be disastrous for the company.