American Express lifted its profit outlook for 2026 after reporting that third-quarter spending held up better than expected. The payments company said billings—the total amount charged on its cards—rose 8% in the quarter, reaching $454 billion, as its higher-income customers continued to spend on travel, dining, and shopping.
The update signals that the affluent consumer segment, which AmEx has deliberately targeted, is still willing to open their wallets even as the broader economy shows signs of cooling. For everyday investors, the news offers a window into the health of consumer spending, a key driver of U.S. economic growth.
Why American Express is leaning on affluent cardholders
American Express is known for its premium credit cards, which often come with hefty annual fees but offer perks like airport lounge access, travel credits, and rewards points. The company has built its business around customers with higher credit scores and steadier incomes, a strategy that has helped it weather economic downturns better than some rivals.
In recent quarters, as inflation and higher interest rates have squeezed lower-income households, AmEx's focus on wealthier clients has proven resilient. The 8% growth in billings suggests that this group is still comfortable spending on discretionary items like vacations and restaurant meals, even as other parts of the consumer economy show strain.
The company's decision to raise its 2026 profit forecast reflects confidence that this trend will continue. It also underscores a broader market narrative: while some retailers and service providers have warned about cautious shoppers, the premium end of the market remains a bright spot.
What the numbers mean for investors
For investors, the key takeaway is that American Express is seeing robust demand from its core customer base. Billings growth of 8% is a solid figure, especially when compared with the overall card spending environment, which has been mixed as consumers juggle higher borrowing costs.
AmEx's profitability is closely tied to how much its cardholders spend, because the company earns fees from merchants and interest from cardholders who carry balances. Strong billings growth typically translates into higher revenue and, eventually, higher profits. The raised forecast suggests management sees enough momentum to expect better-than-previously-expected earnings in 2026.
That said, investors should be aware of the risks. If the economy weakens significantly, even affluent consumers could pull back. AmEx's reliance on premium customers means it is somewhat insulated from the most rate-sensitive parts of the market, but it is not immune to a broader downturn.
Broader context: consumer spending and the economy
American Express's results are often seen as a bellwether for high-end consumer spending, which is a significant component of the U.S. economy. When affluent households feel confident, they tend to spend on travel, dining, and luxury goods, all of which support jobs and growth in those sectors.
The company's update comes at a time when investors are watching consumer data closely for signs of a slowdown. While some indicators, like retail sales, have shown resilience, others, such as rising credit card delinquencies among lower-income borrowers, have raised concerns. AmEx's report suggests that the divide between the haves and have-nots is widening, with the wealthy still spending freely.
For those with investments in the broader market, the news is a positive signal for companies that cater to premium consumers, such as airlines, hotels, and high-end retailers. It also reinforces the view that the U.S. consumer, at least at the top end, remains a source of strength.
What to watch next
Investors will be watching to see if American Express can maintain this momentum in the coming quarters. Key factors include the holiday shopping season, which is a critical period for card issuers, and any signs that affluent consumers are starting to tighten their belts.
Also on the radar is the Federal Reserve's interest rate policy. Lower rates could reduce AmEx's borrowing costs and potentially spur more spending, while higher rates might dampen consumer enthusiasm. The company's guidance for 2026 suggests it expects a relatively stable economic environment, but that could change quickly.
For now, the message from American Express is clear: its affluent customers are still spending, and that is good news for the company and for the broader economy. As always, investors should consider how this fits into their own portfolio and risk tolerance, rather than making decisions based on a single earnings update.
