REUTERS: AmEx Revenue and Consumer Spending

July 22, 2022

Is consumer spending trending up or down?

Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by Reuters in an article—by Mehnaz Yasmin and Manya Saini, “AmEx raises revenue forecast on resilient card spending”—regarding American Express’s earnings forecast and buoyant consumer spending. The article was picked up by NASDAQ, MSN, Skift, El Economista (Mexico), Cash (Switzerland), cnYES (Taiwan), and Börse Online and FundScene (Germany) to name a few.

Increased credit card use:

Running Point sees increased consumer spending continuing as more people are pulled into the labor force, salaries continues to rise, and inflation remains high. For multiple reasons, some of this spending increase can probably be blamed on inflation which is up nearly 9% because:

  • Food and service prices are up, people need to spend more to consume the same everyday essentials they did a year ago
  • Price inflation is faster than salary inflation, it might make sense for a family to purchase some big ticket durables now rather than wait till the items increase more relative to wages
  • Even though bank interest rates are up, inflation is up more, thus the negative real rates people earn on cash are now closer to -6% rather than -2%, therefore people may be motivated to purchase some items now before their cash loses more value

We believe that credit card and payment companies may continue to be solid beneficiaries of the increase in nominal dollars spent by consumers.

Below are the excerpted quotes from the article in English:

“Even though the U.S. social-economic environment seems to be filled with recession fears, we’ve seen consumer spending continue to trend up over the last 18 months,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.

“Since price inflation is faster than salary inflation, it might make sense for a family to purchase some big ticket durables now rather than wait till the items increase more relative to wages.”

In Spanish:

“A pesar de que el entorno socioeconómico de Estados Unidos parece estar plagado del temor a una recesión, hemos visto que el gasto de los consumidores sigue una tendencia al alza en los últimos 18 meses”, dijo Michael Ashley Schulman, director de inversiones de Running Point Capital Advisors.

“Dado que la inflación de los precios es más rápida que la de los salarios, puede tener sentido que una familia compre ahora algunos bienes duraderos de gran valor en lugar de esperar a que los artículos aumenten más en relación con los salarios”.

In German:

“Ein Teil der steigenden Ausgaben kann sicher auf die Inflation zurückgeführt werden”, sagt Michael Ashley Schulman, Chef-Anleger des Vermögensverwalters Running Point. Einige Verbraucher zögen größere Anschaffungen vor, da Lohnerhöhungen der Teuerungsrate hinterherhinkten.

In Chinese:

家族辦公室 Running Point Capital Advisors 投資長舒爾曼 (Michael Ashley Schulman) 表示,「即使美國社會經濟環境似乎充滿了對經濟衰退的擔憂,但過去 18 個月消費者支出繼續呈上升趨勢。」


Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-22-45