The data: American Express’ billed business grew 30% year over year (YoY) in Q2, per its earnings presentation. That’s a slowdown from Q2 2021’s 51% YoY surge, which was fueled by a release of post-lockdown spending.

Here’s a closer look at Amex’s billed business segment:

• Travel and entertainment (T&E) spending surged 84% YoY compared with last year’s 340% increase, which was heavily augmented by post-lockdown conditions.
• Goods and services (G&S) grew 18% YoY. G&S spending in Q2 2021 increased 31% thanks to improved consumer financial metrics compared with the year before.

How we got here: Four factors may have contributed to Amex's strong Q2.

1. Amex’s market position. Despite saying that inflation was a “modest contributor” to the quarter’s volume growth, Amex didn’t notice any significant signs of stress among its customers, CEO Steve Squeri said on the company’s earnings call. Amex’s strong positioning in the premium and ultra-premium card space suggests it has a large segment of affluent cardholders who may be less exposed to inflation than lower-income consumers.
2. T&E recovery tailwinds. A strong jump in travel spending through the last quarter helped support Amex’s billed business: Spending on airlines increased 148% annually, while restaurants and lodging grew 48% and 90% YoY, respectively. Corporate travel, which has been slower to recover, also increased in Q2. Squeri noted that T&E spending surpassed pre-pandemic levels for the first time in April.
3. Younger cardholder acquisitions. Amex has been working on capturing business from Gen Zers and millennials, who made up a large part of Amex’s customer base and were the fastest growing age cohort, Squeri said. These customers—who had a combined spending power of nearly $3 trillion in 2020, per YPulse—accounted for 75% of new US consumer Platinum and Gold cardholders in Q2. US consumer Platinum and Gold card acquisitions reached record highs in the quarter.
4. Investments in digital innovations. Amex has been investing more in digital solutions. Most recently, it partnered with issuer-processor i2c so fintechs and other businesses working with i2c can launch cards on the Amex network. It’s also powering the Abra crypto card, Amex’s first major foray into cryptos. These tie-ups and investments may have helped Amex fuel more spending on its network.

What’s next? Amex’s card revamps can help it capitalize on consumer spending trends.

Amex updated rewards on its Blue Cash Everyday card earlier this month with higher cash-back rewards for online shopping and gas stations and new rewards for streaming services. And it added several new T&E perks for its Marriott Bonvoy Business card last week. Amex's reward updates can help strengthen customer loyalty and acquire new cardholders: Forty-four percent of US consumers cited rewards as their main reason for applying for a new credit card during the pandemic, per a 2022 LendingTree survey.