Amex Customers – Above-Average-Income Consumers – Are Spending like Drunken Sailors, incl. on Travel & Restaurants

They’re the Big Spenders, they can move the needle. Millennials and Gen Z-ers are now the drivers of this growth.

By Wolf Richter for WOLF STREET.

American Express has long marketed its cards to the above-average-income segment of consumers – not just the high end, but the vast population of above-average income consumers. They’re the bigger spenders, and particularly spending on travel services and restaurants. Amex started the trend of premium cards decades ago with its Gold, Platinum, Business Platinum, etc., that all come with hefty annual fees and offer a variety of services. These cards are marketed to people who use them a lot and pay them off every month.

So this is not the lower-end of the income segment, but the above-average-income segment, the vast numbers of big spenders.

And Millennials are now with both feet in that segment, and Gen Z-ers are moving into it, and they have AmEx cards, and AmEx is marketing to them, and they’re applying for Amex cards, and turns out, they’re spending with their Amex cards, along with the rest of the Amex cardholders.

And at least these above-average-income consumers, those that can move the needle if they’re in the mood, are now in the mood.

This is what Amex said about its customers spending patterns in Q1 in its quarterly report yesterday:

  • “Our first-quarter results reflect strong growth in Card Member spending and continued high engagement with our premium products.”
  • Revenue grew 22% year-over-year, to a quarterly record
  • Card Member spending rose 16% on an FX-adjusted basis.
  • Travel and Entertainment spending soared 39% on an FX-adjusted basis.
  • “In March, we saw a record level of reservations booked on our Resy restaurant platform.”
  • Spending in its International Card Services segment jumped 29% on an FX-adjusted basis.
  • Amex added 3.4 million new cards in Q1, “with U.S. Consumer Platinum and Gold, U.S. Business Platinum, and Delta co-brand account acquisitions all reaching record levels.”
  • Millennial and Gen Z consumers continue “to fuel this growth” in new cards, accounting for over 60% of all new consumer account acquisitions in Q1.
  • “Millennial and Gen Z customers also continued to be our fastest growing U.S. cohort in terms of spending, growing 28% from a year earlier.”

And not falling further behind.

“Our customers have been resilient thus far in the face of slower macroeconomic growth, elevated inflation and higher interest rates, with credit performance remaining best-in-class,” it said.

Total provision for credit losses in Q1 2023 was $1.1 billion, or 7.4% of revenues.  As revenues have risen over the years, the credit losses have risen as well, but somewhat more slowly, and as a percent of revenues were somewhat better in Q1 2023 than during the Good Times before the pandemic:

Total provision for credit losses as a percent of “total revenues net of interest expense”:

  • Q1 2023: 7.4%
  • Q1 2019: 7.8%
  • Q1 2018: 8.0%
  • Q1 2017: 6.6%

So one of the reasons for the amazingly resilient consumer spending, even adjusted for inflation – “resilient” despite all the headwinds of asset price declines, inflation, layoff announcements, bank collapses, etc. – is that the above-average income segment, the big spenders, are now out there spending like drunken sailors, and much of it on services, particularly travels and restaurants.

And some of this spending is driven by Millennials and Gen Z-ers that have in huge numbers moved into their high-earning years and high-spending years, and they’re doing it.

Consumers in that segment at least are not “tapped out” or whatever, and they’re not falling behind on their cards anymore than they did during the Good Times before the pandemic.

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  153 comments for “Amex Customers – Above-Average-Income Consumers – Are Spending like Drunken Sailors, incl. on Travel & Restaurants

  1. Minutes says:

    C’mon Wolf, I’m sure you are maxxing out your Platinum Amex card on dinners out with Mrs Wolf.

    • Wolf Richter says:

      From what I understand, you cannot “max out” a Platinum if you pay if off every month. BTW, a few years ago, I cancelled mine after about two decades of using it, and went back to green because it didn’t pay me a kickback, such as 1.5% cash-bank, and instead, it charged me a big-fat annual fee. And so I’d stopped using it, and after a few years of not using it and wasting a bunch of money on the annual fee, I went back to green, and I’m still not using it because it refuses to pay me to use it. We cardholders that pay them off every month are such spoiled brats, LOL

      • Freewary says:

        My Amex pays me back 1.5% and has zero annual fee. Keep shopping for a better card.

        BTW this is not an endorsement of Amex I have one card on each network, each with kickbacks and no annual fee.

        • Freewary says:

          clarify, it’s actual USD deposited into my account, 1.5% of spending on the card, not some stupid points or rewards.

        • Wolf Richter says:

          My wife has some kind of Amex card (I forgot the color, blue?) that pays her a kickback, and she uses it. My visa cards & Mastercard pay me as much and more, no reason to change Amex cards. Lots of places don’t even accept Amex. I use it like twice a year to keep it active.

        • TonyT says:

          Yeah, I think it’s the Blue Amex card – I got one when they first came out. And IIRC, the Blue card is like a regular credit card (you don’t have to pay it off every month).

          However, by now all my Amex cards have been cancelled for lack of use.

        • Fed Up says:

          I have a no annual fee AMEX and keep forgetting I have it. I have a Visa that pays me back 1.5% and a Mastercard that pays 2%. No annual fees on any of them, and a Costco Visa as well. I only do cards that pay me. I don’t pay them.

        • joedidee says:

          got rid of my amex when costco went with citi-visa

        • BS ini says:

          I need to quit being so lazy have had an amex platinum when I lived overseas for the initial points and extra cards with no limit spending . Should have canceled in 2016 . When I called my daughters to cancel my oldest said no because that kept her credit score high since she had the card in her name since she was 18 . I have 3 fee cards that will disappear in 2023 finally I was checking this last week and then this tread came out. No one here cares but I wrote anyway. Info always helpful ie don’t procrastinate

        • SocalJohn says:

          As Wesley Snipes would say about the Amex card, “don’t steal home without it”

      • Seba says:

        Very off topic and I’m sorry but can anyone explain to me the appeal of AMEX cards? We have a few offerings in Canada with an extra % cash back (1% more than comparable Visa cards at 5% where a visa would give 4) but I never bothered because some smaller retailers refuse them for the higher fees charged to them (some retailers I use) and I already have 3 cards, 1 of which has an annual fee so don’t want another annual fee card. Is it just a status thing? Considering the higher fees to retailers I imagine luxury places have no problem with it so you’d be shopping unimpeded with just an Amex there. Please delete if too off topic but nobody I know uses Amex so I need to ask

        • Freewary says:

          Amex is supposedly more on the consumer’s side when there is a merchant dispute, and has a program where warranties get extended. Although they have changed all the terms on this stuff several times which is why I don’t care about Amex anymore and now have a Visa and a Mastercard.

          I found out all these big companies are constantly changing their terms so I have no loyalty to any of them. I’m too busy commenting on wolfstreet to read new terms every month.

        • Steve Letro says:

          The CC benefits in America are not available in other countries. Example we stayed at the Waldorf Astoria Versailles a Hilton property for 5 nights using points and 5th night is free. The check in folks said we have never seen a guest stay for free used Hilton surpass card. Talking with a guide and business owner in France. She told me I have a air France CC and received one free flight with 5 years of use. Over lunch we told her of our CC hacks response not in Europe. So Americans go get your free $10,000. Our credit score is still above 800. Keep Smiling

        • Freewary says:

          Steve as far as I know all the points, rewards, free flights are just games and I’ve only heard about people being disappointed. Also these rewards rapidly become too much to keep track of. I’m allergic to points and rewards. I only use cards that actually deposit a USD rebate into the account of my choice. I have one that does this automatically every month, and another that does it on demand, as often as consumer wants.

          In summary, banks if you want freewary’s business:
          – no annual fee
          – Deposit a competitive rebate into acct of my choice, prefer monthly automatic
          – very low interest rates because I do use cash advance for ATM withdrawal when traveling
          – don’t send me a bunch of spam

        • Nacho Bigly Libre says:

          My card with TBTF was giving me a nice bump on the cashback due to account balance levels. Close to 2.5%. Since then I have moved funds to treasuries and my other card only gives 2% back.

          Amex cards open doors to fancy airport lounges, gives you concert tickets. If you are into those luxuries of life.

        • Candyman says:

          As a merchant, it is a myth that Amex charges higher fees. At least in my negotiations they are same as visa ,discover, master

        • Gabriel says:

          My boat neighbor said he loves AMEX. On an out of town visit he wanted to attend a ballgame only to find it was sold out. He called AMEX and they not only got him seats but very nice seats. He said they have been able to do that for him on a few occasions at different events.

        • Betty says:

          I use AmEx business because it gives me an excel report with all the charges, neatly laid out so I can easily add a column or two (my spending categories) and boom, an annual (or monthly) report in less than an hour, with all the details. I love that. Also, they answer the phones and you can fight back on rip-offs.

        • Wolf Richter says:

          My regular banks do that with my visa cards and Mastercard, including my Business Visa where this is, as you said, very helpful. They’ve been doing this for years. I love the Excel data download because I can sort the data by vendor, and add it up by vendor in seconds, and log it once a year as a lump-sum, instead of monthly, which saves me a lot trouble in my bookkeeping. I think this is pretty much standard now with credit cards.

        • joedidee says:

          cc have commissions not fees
          amex used to be 7%
          I’m for flat $1-$2 fee per TRANSACTION regardless of amount

        • 91B20 1stCav (AUS) says:

          Seba – long out of the game now, but we ultimately kicked AMEX out of the moto shop not only because the higher use charge didn’t pencil against sales volume, but they were consistently paying late, as well. Mebbe they’re better, now, but fool me once…

          may we all find a better day.

        • Seba says:

          Hmm.. seems there are some perks but I’m not on the kind of salary where I’ll be staying at a Hilton in Paris, I’m usually way out in the suburbs when I do get a chance to go 😆. Thanks for the responses.

        • Bob says:

          They give you a lot of freedom. No BS or blocking a transaction b/c they think it’s fraud (like wells, BofA) and no international usage fees if you use out of the country.

        • Bs ini says:

          My platinum card gave me unlimited credit when living overseas. Just to travel home for Christmas I could not book my flight on any card but platinum because it was 40k charge and my other cards had 20k limits. Also the international personal travel agent was very beneficial when traveling overseas and issues came up like a room with ocean view and had a big tent in front. One call to my travel agent amex and management fixed when they would jot before. So yes there are benefits to the 600 fees annual now or maybe more before was 400. I traveled to Kazakhstan last month and that card helped me when my departure from Dallas was delayed and the trip took an extra 2 days due to rerouting. For me well worth the 600 but I’m canceling the card as well because I won’t make any more trips like that

        • FreeAmexCardUser says:

          In the old days pre-atm Amex had travel offices worldwide where you could get local currencies, travelers check and do travel arrangements all charged to your account. When ATMs made an appearance they put in their offices where you link them to your checking account. This service still around is called “Express Cash” and they link your charge card to your checking account, so you can access it at ATM apart from your debit card. The other big thing is they allow you to put limits on your authorized users. So you can give it to your kids/relatives and put a cap on how much they spend a month.

      • CCCB says:

        Correct. You must pay it off every month, or else…

        About 8 years back, my wife/business partner had breast cancer which required major surgery. Our business slowed down and out of caution I worked out a 6-month payment plan with AMEX. We weren’t sure how long the slowdown would last. Luckily, we were able to pay them off in only three months. They proceeded to immediately cancel our account and take back over a million flight miles too. BTW I had held an account with them since 1980 and paid them in full every month for over 420 months.

        I’ve told this story to hundreds of folks, hoping that I can give the ba$tards a little payback for their compassion and stupidity. I say stupidity because since that time, we’ve racked up millions of miles on our American Airlines and United Mastercards. There’s a happy ending too. My wife is using 400,000 MC miles this summer to take my niece to Europe. Yes, mileage rewards suffered from inflation too.

        I highly recommend cancelling your AMEX if it makes any sense at all to you.

        • joedidee says:

          don’t fly and don’t care about airlines
          and don’t have real ID license either
          so I can’t enter FED buildings

        • Freewary says:

          Yet another story of people getting ripped off on points, perks or rewards. Like I keep saying- competitive rebate deposited into the account of my choice monthly or forget about it.

        • joedidee says:

          Like I keep saying- competitive rebate deposited into the account of my choice monthly or forget about it.
          surely they’ll convert it into the
          NEW GREAT RESET CBDC IMF introduced 2 weeks ago

          hope you have carbon credits and social credit score high enough

      • Harrold says:

        I used to work at diners club. While it advertised no account limits, behind the scenes there were limits. But it would take a lot for someone with a sufficient history with them and a large average spend.

      • Logan Kane says:

        I agree with Wolf here, Amex cards (especially the platinum) are for show, I use a less flashy card with better cashback and better acceptance abroad.

        Maybe the population of Amex spenders correlates with high earners who aren’t very good with money!

    • Steve Letro says:

      No limits on Au and Pt AMEX cards. The Capital One CC are excellent.

      • Disrupter52 says:

        I love my CapOne Savor card. Use that for dining out and pay it off every month for that sweet sweet cash back

    • Leo says:

      Fed QT failed because it kept buying MBS and never sold it outright. The still high house prices allow tapping home equity and allows to pay back credit cards while spending beyond ones means.

      Out assets have questionable value and our debt keeps increasing. What can go wrong?

      • Nacho Bigly Libre says:

        We can contrast all this high spending with increase in food scarcity at lower economic tiers.

        Aggregate stats look rosy, but the reckless money printing of 15 years followed by rapid tightening has left the asset owning class faring well and paycheck-to-paycheck population scrambling.

        • Einhal says:

          Exactly. “Asset price headwinds” means what, the S&P is down 14% from its ridiculous bubble high?

          That’s not going to rein in spending at all, especially when the asset owning class is convinced the Fed will save them if anything really goes wrong. They’ve been right for 15 years.

          To get inflation under control, it’ll take stock prices tanking (like back down to S&P 1,500-2,000, along with them staying there), because the Fed publicly states it’s not rescuing Wall Street.

          Next year or two should be interesting.

    • Captainpeacock says:

      Is this the blistering spending that explains why the stock is the same price as two years ago?

  2. 2banana says:

    Drunken sailors are pretty cool.

    And only spend cash when on shore leave.

    When they run out of cash, they stop spending and go back to the ship until next payday.

    “is that the above-average income segment, the big spenders, are now out there spending like drunken sailors, and much of on services, particularly travels and restaurants.”

    • drifterprof says:

      My Uncle Whitey (his real nickname) was a drunken sailor who worked merchant marine much of his life. A typical not-so-bright alcoholic who ended up needing to live at my parents for months on end when he lost everything (family, job, etc.).

      He was definitely not “cool” but he did have some cool colorful verbal sailor expressions that were cool.

  3. Eric says:

    They’re spending big because they are not being laid off from high-paying jobs. Corps have hired them, trained them, don’t want to squander embedded costs…then have to repeat after recession.

    Labor in driver’s seat again and this time corps can’t offshore no matter how bad inflation.

    Which is inflationary but that’s NWO.

    • Leo says:

      But corporation results this quarter are pathetic, not when comparing to lowered estimates, but when comparing to last year results and adjusting for inflation.

      So, I expect budget cuts and more layoffs.

      It’s funny that wallstreet is still to not see this! Probably waiting to apply thier spin to it: Bad result is now good because it will cause fed to pivot.

  4. Tight Purse says:

    Indeed, nothing matters to the mighty American consumer – higher food costs, higher restaurant prices, higher fuel costs, higher electricity costs, higher airfares, much more expensive hotels, higher cost of various services, higher rents, higher mortgage rates etc.

    None of this counts. Until one day …

    Somewhat off-topic, Wolf: Amex has a ton of customers who are indeed spending a lot due to being heavily stimulated. Does that report include any data about how much Amex has PAID to acquire and to retain those customers? I’m referring to the sign-up bonus points for their cards, to the bonus points they give you for not closing the account, to the various points they give you on certain spend categories, such as travel or groceries etc.

    • Wolf Richter says:

      “Does that report include any data about how much Amex has PAID to acquire…”

      Obviously, this being a quarterly earnings report, Amex discussed all kinds of expenses, including the big expense of travel-related benefits. But that wasn’t the purpose here. I’m not at all interested in that. I was exclusively interested in what it had to say about its customers’ spending patterns.

    • Steve Letro says:

      Before retirement in 2015 we studied travel hacking. We hit the goal of 1 million points or miles worth $10,000 in a few months. All CC are on auto pay and most bills auto pay with capital one (CO). We travelled Fall 2015 to March 2020 enjoying free flights, free hotels and many perks. We continue to enjoy the benefits. The (CO) CC 2% back, many vendor deals and cheap annual fee. Example used (CO) link to VRBO for 5% discount on Hawaii condo. Then used (CO) points to cancel $4000 of condo cost because lodging travel.
      I know many folks are against CC hacking but study results in benefits.
      Another example in the past year $150k in alternative cancer treatments resulted in many points and ease of these many payments with auto pay. Our experience is very positive and another arrow in the quiver of smart money management, Keep Smiling.

  5. chuck says:

    So, here’s a question. If their customers are paying off monthly rather than accruing high interest charges, how can AMEX handle a 7+% bad credit write-off when, I assume, their merchant fees are substantially lower?

    • Wolf Richter says:

      Amex does offer credit. It has a slew of cards, including regular credit cards. It has an FDIC-insured bank, and you cant get a savings account there and buy CDs. It offers all kinds of financial services.

    • Corey says:

      Those loss provision numbers are quarterly. A 7.4% quarterly loss is 2.5% per month. AmEx interchange fees vary, but let’s call it 3%. That’s enough to cover the loss. Then add the interest income from customers who carry a balance each month.

    • Adam Smith says:

      Actually, AmEx merchant fees are, in fact, notoriously high, compared to those charged by other credit providers:

      This is the reason many merchants don’t accept AmEx; you’re far more likely to be asked for an alternate card when you offer AmEx (any color), compared to the experience of using Visa, MasterCard, Discover or other such tools of the great unwashed (such as myself…)

      To be clear, I’m not saying AmEx is not in widespread use. It surely is; they run an enormous (and hugely profitable) business, obviously. Still, I think you’ll find far more merchants that have “opted out”, compared to other credit cards, exactly because of the comparatively punitive merchant fees.

      • joe2 says:

        One anecdote – a high end lawyer pulled out an AMEX black card with much fanfare and the shop owner asked if he had a Visa card instead. Yes the AMEX fees are higher and all CC fees add up to thousands per year even for a small shop.

        Long time ago AMEX saved me overseas with a cash advance. Now with all the ATMs around, I just keep a debit card tied to a sterile bank account with a fixed balance. For real emergencies, a few sovereigns.

  6. MATT MATUSIAK says:

    I know this is unrelated.
    I was wondering if there is a chart of monthly CRE defaults since 2019.
    I am curious if the number is increasing and is the delta increasing.
    “collapse happens gradually…then all at once”

    • Wolf Richter says:

      I don’t know of overall CRE default charts. But in terms of CMBS – being securities, there’s more info on them out there – we have the data on loans being sent to special servicing and on loans defaulting, by CRE category, and I cite them occasionally, and I posted a chart or two when it got interesting. The CMBS special servicing and default data is tracked by Trepp, and I get their data if I ask nicely. But this is just CMBS, not overall CRE.

      My theory is now that banks have securitized some of the riskiest CRE loans into CMBS and sold them, and that other non-bank lenders have financed other risky loans. I say this because all the big office and multifamily defaults that I have seen recently involved non-bank investors, such as CMBS, mortgage REITs, PE firms, etc.

  7. E Vansaw says:

    Data is fine but when you summon the usual axiomatic “all things must pass” you can accurately predict an evaporation of this condition, it happened in the 60s and 70s to the boomer crowd. The word “Yet” should be applied tothe end of many of your statements Wolf.

  8. Stephen says:

    No slow down in spending here in Naples, FL. Homes still in the $8M -$12M range for a nice home (nothing to make the Great Gatsby blush – your standard 5-6 bedroom, maybe 4,000 – 5,000 sq ft) in a great neighborhood.

    Btw, with 1.75 cash back (my current card rate), a consumer will make thousands of dollars a year. If you are going to spend anyway, yes, you will use the card – and pay it off every month. Wealthy people are not USUALLY stupid with their money.

    • Harry Houndstooth says:

      Especially when their house is still above water.

    • BrianC - PDX says:

      Ugh to *make* thousands off that 1.75% cash back, that consumer has to *spend* 100% on a lot of something. I get it, but I just don’t use my cards for much. My card spend per year is in the hundreds, not thousands. Sometimes I feel so *out of it*.

    • Zest says:

      Stephen, are you suggesting a typical consumer could make thousands in cash back on a 1.75% cash back card?

      That would require spending *at least* $114,000 a year. That’s honestly mind-boggling to me. I guess I’m not hanging in the right circles.

    • MM says:

      You call 6 BR and 5k of sqft is standard?? That’s a McMansion to me….

  9. patrick says:

    just on the way from the beach – virtually everything was sold out while we were there for two weeks in april ! restaurants – bars- clubs – luxury retailers all jammed – and we were told ” if you have not secured your summer rental you SOL !” on the road headed back the southbound lanes were bumper to bumper or at full stop -its$$$$$ out of multiple rivers! also noticed our home town just got another $ 118 million for emergency covid relieve this is april 2023 !

  10. patrick says:

    while at the beach our neighbor who owns a small very high tech welding company- his beach time was interrupted because one of his engineers has been approached by tesla to move to their austin texas operation – he currently makes around $175 with full med benefits with our neighbor – tesla has offered – $250 base – bonus up to 50 % of that – stock options – 0 copay on medical dental – will move him at 0 expense to him- $25000 for miscellaneous expenses and then they will “gross” him up so that the 1099 taxes will be paid by tesla –

    • Apple says:

      Sounds like Elon is spending like a drunken sailor.

      • gametv says:

        Tesla has a very long way to fall. The company is running into stagnant demand at a time it is ramping up production of two old vehicle models.

        • JD says:

          Yes, but it has a dominant position over international rivals (especially since they can’t compete with Tesla on price — hence the Tesla price drop this week). His politics are toxic and likely driving customers away, but the EV market is not shrinking (especially after the poorly named Inflation Reduction Act pours billions into EV infrastructure)).

      • phleep says:

        I am looking for a comprehensive buckling (meaning collapse) across large parts of Elon-land. Big tremors this week. His riverboat gambler style can withstand the first wave of screw ups, based on creditor faith, but may need substantial reorganization. A lot depends on whether this still-bubble-tinged economy continues. Interesting to see how that would play on psychology — as big as Trump’s 1990s swoon, or the 2008 era fallen stars? Could reverb across crypto and such, for sure.

    • Praiire Rider says:

      “Have TIG — Will Travel.”

    • bulfinch says:

      Those numbers sound just a little jazz hands-y. Not sure about what a “high tech” welder is, but even the underwater welders I know (very lucrative, if you’re good) don’t pull in anything like a quarter mil annually.

      But who knows? Musk seems to like to fantastically overpay for things, so could be.

      • BS ini says:

        This was an engineer with experience with special skills and trying to get someone to move. This type of offer was available in 2009-14 in the energy business due to lack of engineering talent .

      • VintageVNvet says:

        Folks I knew ”back in the day” earned a TON more than ”$250K” per year in our currently debased currency bf:
        Going rate for going down in the Gulf of Alaska in the 1980s, plus or minus that year, was $1,000 per day, in and out of the ”bariatric chamber” they lived and worked in thousands of feet + down in that ocean…
        God Bless them all far damn shore for that effort,,,
        And, to be clear, ALL of them I have known have died young, similar to SO many of those great folks who served in WW2, etc.

        • 91B20 1stCav (AUS) says:

          VVNV – quaduple-check. (…and what value do ‘we’ truly ascribe to the vanished, breathing lives of serving/working ‘peedons’ when compared to the cold, hard cash from a clipped coupon that remains on this side of the grass???).

          may we all find a better day.

    • joe2 says:

      I remember those days for international moves. I thought they were over. just shows you it still pays to be a profit center.

  11. OutWest says:

    I used to work in restaurants and bars (paying for college) and can say that Amex users are a better breed. They were generally more courteous and they seemed to control their liquor consumption better. I can’t remember even once having a mean drunk bust out an Amex card…

    • dougzero says:

      I know a few small business folks with one and they all have good impulse control, which is useful with unlimited account?

    • Implicit says:

      The best customers might pay the bill with a card, but give cash for the tip and call it a gift so it will be tax free.

      • VintageVNvet says:

        10-4 imp:::
        Been doing it that way since the GUV MINT started with the attempt to charge any and every server for ”gratuities” of which they, in this case the GUV MINT they have NO idea,,, AS USUAL…
        GOD Bless our server folks,,,
        From whom WE, in this case the family WE have received SO much wonderful help for decades, but especially these last few years with all the various and sundry challenges.

        • joe2 says:

          I started giving excessive tips in lieu of donating to charities after I found what those charities sucked off in administrative costs. And yeah, I keep it off the credit card receipt.

          I still remember how pumped I was after getting a $20 tip as a young caddy. The golfer was a young guy who hit the beer cart frequently. An all-around good role model.

  12. Alba says:

    At first glance it seems reckless for affluent Millenials and Gen Z-ers to be spending ‘like drunken sailors’ in this environment, but since they know the planet’s burning they’re not really in the mood to save it for an uncertain future. To be honest it makes sense.

    • CCCB says:

      They also seem to intuit that their wealthy baby boomer parents (the generation they love to trash most) will be leaving them a pile of cash and some nice real estate when they pass, so why bother working if you can live large, travel the world and collect big in a few years.

      • Disrupter52 says:

        A lot of us with parents with some assets, but aren’t super wealthy, will almost certainly see their parents live way too long, get crushed by medical debt, get a reverse mortgage, and then leave their kids a bill.

        • Bs ini says:

          I was an upper middle class baby boomer until college 2 weddings and two homes for my two daughters came along. I’ve told them that was their inheritance which they believe. but I’m thrilled I could do this for them they are fully independent and have homes and cars paid for in their 20s.

      • w.c.l. says:

        That’s a big assumption. Nobody says you have a right to their money. I’ve seen more than one RV over the years with a “We’re spending our kids’ inheritance.” bumper sticker on it.

      • David H says:

        A few years? You realize most will be in their 50s or older when their parents pass right?

    • bulfinch says:

      Planet’ll be okay — it’s the homosaps gatecrashing it who’re are toast.

      • 91B20 1stCav (AUS) says:

        bul – fourple-check, but a transmission that is deucedly-difficult to have clearly received…

        may we all find a better day.

  13. CreditGB says:

    The same generation that dumps billions into closed Delicatessens, cash burning machines, and other “smart money” moves. As Wolf so aptly put it, consentual hallucination seems to be the core strategy.

    Just like on the freeway, it is best not to follow them too close.

  14. CreditGB says:

    Be sure they are not using your company name without your permission to persuade companies to join the Amex payment system.

  15. Rico says:

    It’s going to take a ton of bricks to slow this economy down.
    How does it slow down. At think at some point they might try taxes.

  16. gametv says:

    I assume that AMEX has alot of small business owners as customers. Many small businesses received the PPP, but didnt see revenues decline beyond the maybe 3-4 months. So alot of pure profits went into people’s hands.

  17. Nissanfan says:

    Most places don’t even accept American Express, so good on them finding their niche clientele. It’s Visa or to some extend Mastercard.

    • Disrupter52 says:

      I have 3 cards I pay off monthly, and the lack of acceptance of Amex cards is the biggest reason why I never bothered with one and never will.

      • joe2 says:

        I had one for 30 years, switched to the Costco AMEX and let it lapse when Costco switched to Visa. I reapplied when they offered 100K points bonus to apply. But it was too much trouble to unlock my credit reporting freeze.

        You can do pretty good if you cancel cards and reapply after 2 years for the bonuses. Kind of like a CC ladder if you stagger them.

        • MM says:

          “But it was too much trouble to unlock my credit reporting freeze.”

          Not sure how recent that is but these days its very easy as long as you have accounts with Experian, Equifax, and Transunion – you can freeze & unfreeze right in your acct settings.

          I normally keep my credit frozen with all three, but recently had to unfreeze to apply for a loan. I unfroze w/ all of them in <5mins.

  18. Michael Engel says:

    1) Provision for total “interest losses” out of total interest revenue is 7.4%. The zombie accounts don’t pay interest. They are not NPL.
    2) Over 50% of millennial bought a house when mortgage rates were between 2.5% and 4.5%. They have plenty cash. They fly, spend money on rentals, hotels and restaurants. They have a dual income, no kids in college. Most of them are married, and stay that way, the inverse of their divorced boomers.
    3) A big wealth is waiting for them from their dual patents , or multi parents and grandparents inheritance. They buy EV, because EV is in an uptrend. They call their groupthink from the ski lift
    4) In Apr SPX consolidate, a tiny bar (so far) pumping muscles above March close. SPX might jump over the hoop > Jan 2022 low, or down for a sling shot up, because the Gen Z and the millennial cannot stop spending.
    They don’t care about politics, or gov default.

    • drifterprof says:

      ME: “Most of them [millennials] are married, and stay that way, the inverse of their divorced boomers.”

      According to awfamilylaw: “The marriage rate for baby boomers under 40 was around 91%. Among millennials, that figure has dropped to only 70% … Millennials are cohabiting with their partners more and getting married less.”

      So, in the under 40 age bracket, fewer millenials get married, not more. And they marry later, which may indicate they are being more careful, realistic, or picky in selecting partners. This would likely result in a reduced divorce rate compared to boomers and other previous generations where marriage was a requirement for being a normal person, and many people just grabbed whatever was on the shelf.

      Also, millenials are cohabiting without marriage more, so leaving a partner is not recorded.

      • Wolf Richter says:

        “…and many people just grabbed whatever was on the shelf.”

        OMG, this is why love the comments

        • EconMoonlighter says:

          That statement is completely true! My boomer parents are a pretty blatant case of “we stayed together for the kids”. Now that they’re older, it’s “we’re too old to get divorced.” Seeing this has definitely caused me to be more choosey.

      • w.c.l. says:

        “Previous generations where marriage was a requirement for being a normal person.” I’ve never been married and I’m normal (I don’t care what the judge said). Sometimes I get envied, probably by those who chose ‘off the shelf”.

        • phleep says:

          I think other choices became a widely conscious option (“normalized”) in the 1970s. Before that, marriage at the standard age was vastly standardized.

        • 91B20 1stCav (AUS) says:

          …be sure to consider the historic context. In earlier times, marriage WAS, at least, as much a business-of-life transaction as a romantic one. Modern communications/entertainment and mores emerging from the Enlightenment have heavily-shifted the societal equation (in the West, anyway) towards the romantic side for many (the dopamine is where one finds it…).

          may we all find a better day.

      • joe2 says:

        “Millennials are cohabiting with their partners more and getting married less”

        Check your state for common law marriage.

    • Bs ini says:

      For sure mr Engel. They have either homes paid for or 3 percent or lower Mtg with homes much cheaper with 50 percent paper equity and 2 incomes. But they are having kids because the schools are filling up in the right districts.

  19. Loeden says:

    Look, I’m definitely here for the doom and gloom too, but the thing is.. A certain segment of the population is doing pretty darned well right now.

    As one of the eldest millennials (I am in my early 40s, so don’t give me any sass about youngins) I am hitting the stride of my career and finances. If the dot-com crash and 2008 hadn’t broken me down to the bedrock, I probably would have hit it sooner. Yes, the world is terrible and my stocks smacked me last year, but around here (rural) my general cohort is gainfully employed in decent jobs and a surprising number of us are living within our means. Inflation has become normalized and only occasionally comes up as a hot topic since we’re still in our earning years and feel the pinch less than people who are on a fixed income, closer to retirement, or in the lower-paid early years of a career. My tradesmen friends have business coming out of their ears and even my buddies who work at the prison or feedlot have had raises, far away from worry about tech layoffs or the like. We are not the slice of America that is suffering (at the moment.)

    I’m not in the least surprised to read that this segment of the population is spending heartily, even though I’m personally buckling down my spending in anticipation of trouble. Both Discover and Amex wised up and came out with no-annual-fee cards and moderated the previously onerous merchant fees to a more competitive version. Both of them frankly tend to get a choice cut of customers, so you won’t see the suffering begin there. It might spread there, sure, but it won’t begin there.

    (And to the few commenters who are suggesting that we are expecting our boomer parents to leave us things or spending because the planet is burning or throwing money into cash burning machines, has it occurred to you that we are the prime aged workforce now and most of us just, you know, work for a living? Grow up.)

    • Implicit says:

      Agreed. I have 4 millenial aged kids between 32 and 38, and I see the same thing.

      • anon says:


        Our millennial aged kids are doing things the same way

        And we have GRANDCHILDREN ❣️

        • Implicit says:

          Same here! I tell my kids: “teach your children well, their parents hell will slowly go by” (CSNY)
          Helping prepare them for life. Three generations went swimming in the ice cold east coast ocean last week. The 6 yr. old was the first one to duck under the water. What a rush!

    • Lauren says:

      Great comment. I’m slightly younger than you and I’m experiencing something similar. There’s never been a better time to have a real profession.

  20. A says:

    The Fed is all bark no bite. Loaning money at 5% when inflation is 7% makes the loans more free than during ZIRP.

    And there’s no reason to invest because stocks haven’t gone up in 2 years. So the only choice for the consumer is spend spend spend!

  21. Aussie Andy says:

    Buffett is having a Buffet on millennials

  22. William Leake says:

    I’ll stick with my cards that give 5% cashback at Instacart and Amazon, and 2% cashback elsewhere, no annual fee. Amex sent me a packet to apply for some black and gold card with a $645 annual fee. I chuckled, tore it up, and threw it in the trash.

    Most wealthy people are generally unaffected by inflation and other such mundane problems. They will spend whatever and whenever they like, especially those who inherited their wealth.

  23. LongTimeLurker says:

    Another thing that retail are beginning to take notice with American Express is the company’s high yield savings account with 3.75% APY.

  24. R2D2 says:

    Amex is the Rolex of credit cards. A Lambo in your pocket.

    Owners and sellers know they’re overpriced… but the brand status reels you in.

    Whip out a plain ol’ Visa card in the UK, and nobody takes any notice… Whip out an Amex card — particularly the shiny gold one — and you’d be amazed how many retail or resto staff start calling you “sir”.

    Those little status signals do not go unnoticed. Amex is a clever company. They understand the work of Mr Veblen.

  25. Einhal says:

    The Amex Platinum, while having a high annual fee, is worth its weigh in gold if you know how to use it correctly. It has tons of credits and other things that if you use, you’ll get far more than the $695 fee.

    Most people don’t use them though, which is how Amex makes its money on those cards.

    • Pavel says:

      I resent the high annual fee but am keeping my Platinum card mainly because I travel very frequently and their service team has always been extremely helpful (and polite, and based in FL still and not offshore) when I have had problems — e.g. sending me a replacement card overnight to a foreign address. And in certain places (certain Asian hotels come to mind) one does seem to get better service.

      My dear father, on the other hand, kept his green Amex all his long life despite his very successful career and eventual significant wealth. Now *that* is cool. :-)

      • Bs ini says:

        I agree with Pavel all depends on the user and the time and expense for the perks from amex. There is real value with the card.

    • RichardW says:

      “The Amex Platinum, while having a high annual fee, is worth its weigh in gold…”

      Only about $400 then.

  26. Depth Charge says:

    They printed too much.

  27. longstreet says:

    An entire generation was taught NOT to save.

  28. JoshWx says:

    I find it strange Gen X didn’t find their way into this article. This generation has benefited the most from the housing surge (many with homes paid off/nearly paid off and were actually able to tap into this massive store of equity) and are in their prime earning years. Older millennials are on the cusp of their prime earning years, with most of this group still in their 30’s and navigating their way up the ladder.

    With that being said, the prevalence of dual income households, fewer kids, and no student loan payments is contributing to strong Millenial/Gen Z spending. Job losses have been too inconsequential to deter spending habits.

    • Bs ini says:

      No idea of demographic info of this group but Gen X is small because of demographics and yes are leading the way in many categories for reasons stated. My guess is this group is 60 plus but many don’t comment. I’m 65 . I found this site because I was searching for Wolf Wave that I used to track in the 1990s but can’t find that info any more.

    • Wolf Richter says:

      “I find it strange Gen X didn’t find their way into this article.”

      LOL, “strange” only in your imagination. Do you want a list of all generations that are still alive? Go look them up. All generations that are still around are buying stuff. No need to list each generation separately. Gen X has been around for a long time and it isn’t the driver of growth anymore. The new drivers are Millennials and Gen Z-ers. Even if you don’t like it. That’s why they’re named here specifically.

  29. Michael Engel says:

    1) Amex gold and platinum get respect. Gold and platinum belong to
    the vault when not shown.
    2) American Express (AMX) is a frequent flyer to Jan 24/27 2020 : 138.13/128.37.
    3) AMX gap up on negative earnings and revenue in Jan 27. It closed the gap and popped up on negative earnings on Apr 20 last week. Something is wrong in Omaha.
    4) The low silhouette French AMX-10 reached Ukraine.

  30. Flea says:

    US dollar is being devalued as well

  31. THEWILLMAN says:

    When the well off 50-somethings and 60-something decides to leave the labor force and enjoy life during Covid – their VP title (and pay) goes to someone younger.

    Boomer money is finally going to younger generations. We just went through a mass retirement event of the highest earners.

  32. Implicit says:

    I would suggest working remotely in a data analyst type position being offerred in the US in a business that is less affected by recessions.

  33. Bs ini says:

    Good questions. Energy business that I was in similar to biotech I assume. As long as cash is available they need you and will pay you to move as soon as the cash dries up they can’t pay you and go negative cash flow for long and you’re on the street. If you rent don’t buy and buy a low cost (20k or less) used car the depreciation on car less and rents will stay flat as long as Fed keeps rates high. Then if biotech changes tune you have to relocate to where the work is. That’s been happening for centuries. Just the ebb and flow of life. No way to make perfect decisions on imperfect info if there is a family involved more difficult I did not move severa times due to kids in school

  34. VintageVNvet says:

    one of my many wonderful ”mentors” ”many years ago”
    set me straight about such decisions L:
    Do everything you can do toward what these days is called ”due diligence”…
    After that, make such decisions in your heart.
    IF you are not yet in clear connection with your heart,,,
    Do your best to make that connection ASAP.
    SO many ”modalities” these days to help you do that!!!

  35. eg says:

    Thanks for this, Wolf — a helpful reminder that aggregates hide a ton of variability across the income and wealth distributions.

    Not everyone experiences inflation the same way — heck, they don’t even experience the same inflations due to consumption variability — despite some flagrant idiocies promoted by the orthodoxy.

  36. Bobber says:

    What would spending be if people realized they might get only 70% of the social security promised to them? That’s what benefits would be if SS is not restructured. Medicare may be heading towards the same type of problem.

    What if stocks were trading at the long run average P/E?

    What is there wasn’t $1.5T to $2T of deficit spending every year?

    Everything is artificially inflated. The safe move is to increase savings, not spend more.

    • Citizen AllenM says:

      You must be joking, if we cut benefits for the old the revolution would happen the next day. I find the Republican Fetish to kill Social Security to be insane. The old white folks that support it in flyover would kill them in the next election. Bad enough to play with the debt ceiling and default. But 70% of bennies and worse healthcare? Good luck avoiding the walkers coming for your head.

      The insanity of even suggesting it contributed to Blake Masters crappy performance in the last election. So go ahead, tell the old folks they really are poor and dependent on the evil gummint.

      Taxes will go up, and a lot of it is being paid by labor that currently will not benefit from those taxes, because they are not in the system. How about that scam?

      The government will never default, because it will be the end of one party. Which is coming anyway.

      Stop dreaming of a world long past.

      • Gomp says:

        Seems like some here need to diversify their media choices and delve deeper into some of the goings on. Sheesh.

    • Lauren says:

      You have to find some kind of balance. What I do personally is pay myself first in my retirement/savings accounts, and after that all bets are off with what I spend money on.

    • Petunia says:

      SS will not be cut because most people in congress are on it, even our current president and first lady.

  37. This time is different says:

    Ok, let’s go with the worst case scenario, if inflation turns into hyperinflation, and people run with the last paycheck to buy some bread, before the price goes two times above the paycheck – believe me I’ve seen this in my life – what will happen then with the credit card companies? :)

    • Wolf Richter says:

      They get $150 in fees from your purchase of the loaf of bread, LOL

      • BeeKeeper says:

        “if inflation turns into hyperinflation”
        at that point $150 fee will most likely be over $15M fee

    • Uncle Bob says:

      My understanding is that during HI, credit disappears. It’s all about cash – that is, the lack thereof. Hence the Weimar wheelbarrows of cash.

  38. kramartini says:

    Visited the Amex Centurion Lounge during a layover at IAH this morning. The place was infested with Platinum Card toting milennials. There is no escape from them! Pretty soon they will have replaced us!

    • DawnsEarlyLight says:

      What about Gen X’ers? I thought they were the active, happy, and achieving a work–life balance generation. MTV was too much for them?

      • elbowwilham says:

        Purely anecdotal, but I’m a younger Gen X (in my late 40s) and I don’t do much extra spending anymore. I’ve done it all. Plus I am divorced and not interested in the dating scene. I prefer to go for a hike in the mountains with my dog, cook a steak at home with a beer watching old Star Trek (TNG) episodes.

        A single older man can live pretty simple. I do have 2 teen boys that I spend most of my money on.

        • bulfinch says:

          Consumerism is one of the more loathsome byproducts of capitalism. There’s a tendency to elevate the injunction to vacay or cram your closets full of BS as a sign of ‘consumer confidence’ or a ‘robust market’ — but all I see around me is more of the standard cart-before-the-horse behavior we’ve seen since time immemorial; the jubilant part of the arc just before the inevitable trough in the interminable boom/bust economic cycle.

    • Wolf Richter says:

      LOL. Yes, that’s Fate.

  39. Sean Shasta says:

    @kramartini. isn’t that how life is supposed to work? LOL

  40. gert7to3 says:

    I just used my Amex/Delta Card to pay for my taxes and a cruise trip. I have American and United CC’s as well. These are the three airlines servicing my smaller city. I get the money back on baggage savings and scoring the occasional ticket. BTW I am using miles to return from Japan after the cruise.

  41. JimW says:

    Fiscal policy is highly stimulative; monetary policy is still somewhat stimulative; student loans aren’t being paid; and trillions of Covid bucks are still ricocheting through the economy. It’s a miracle that inflation isn’t running at 20% annualized. It’s a great time to be in the credit card business, and 25 basis points and done in May by the Fed will extend the party.

  42. John says:

    Hey Wolf, not sure if you can get this data but several years ago AMEX began allowing certain transactions into an interest barring account and did not need to be paid off in full. I’m curious how big this has become and a better question is, are the customers spending like “drunken sailors” and paying off their entire balance every month or is AMEX credit exposure exploding & going totally unrecognized?

  43. Anonymous says:

    Don’t have an Amex card. Not sure if the recent trend to pay as you go is leading to irresponsible spending or is correlated.

    Lots more layoffs happening. While the index is higher, many tech stocks are significantly lower. Tech houses a lot of the younger sophisticated tech worker with high incomes and yoga pants etc crowd that I suspect doesn’t want to give up on their lifestyle. If tech continues its decline, I suspect some of this spending will moderate (or not, since this time is different w trillions in spending).

    Don’t understand how this mania can keep going. I think the student loan restart and layoffs will force the recession. Expecting any kind of crash though seems unlikely.

    Spending is habitual. People are spending because they have become disassociated with the value of money. They are unwilling to buckle down bc they believe the money will either inflate or government will find a way to release trillions more dollars. Debt ceiling battle will get interesting…

    Housing market needs to reset, aka housing needs to seriously depreciate to put a damper on this spending. Fed Reserve is intentionally sleeping on inflation hoping to inflate debt away without breaking the confidence. This is going to damage its reputation for generations. I don’t think we are returning to 2% in my lifetime… at least not without a crash…

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