American Express recently announced that its profits in the third quarter climbed by 71 percent over the previous three-month period thanks to customers increasing their credit card spending by 14 percent, according to a report from the Wall Street Journal. This change came even as there were considerable concerns over the state of the economy, including the continued elevated levels of unemployment and a severely depressed housing market.
"I think you'd have to be in outer space to not be concerned," American Express CEO Kenneth Chenault said in a Goldman Sachs webcast, according to the news source. "That said, if I was just looking at us in a vacuum, I would feel very, very positive."
The newspaper noted that American Express likely saw profits climb because, unlike other lenders, it both issues credit cards and processes the transactions on them. In addition, it offers both charge cards – which need to be repaid every month – and the traditional accounts which allow consumers to carry a credit card debt balance from one moth to another. American Express likely saw more customers take on credit card debt in the last three months because its clientele tends to be more affluent than those of other lenders.
Furthermore, American Express said that, like most lenders, it had far fewer losses thanks to defaulted credit card debt, the report said. However, it's been struggling to convince consumers to open new accounts, although this too is an industry-wide problem. Through the end of October, the company's total outstanding loans totaled $48.9 billion.
A number of studies have shown that consumers have made a conscientious effort to reduce their credit card debt recently. This includes using their accounts less often and putting more of their discretionary income toward paying off the existing balances they carry. The most recent statistics from the Federal Reserve showed that consumers have decreased the total debt they owe on a national level considerably over the last few months as a result of these trends.