American Express Co’s quarterly card spending hit a new high as pandemic-weary travellers ignored soaring airfare to flock to airports, allowing the company to lift its annual revenue projection and push its shares up 5%.

The credit card company also outperformed expectations for April-June profit, joining major US banks such as JPMorgan Chase & Co in underlining the endurance of consumer spending in the face of an uncertain economic outlook.

Chief Executive Officer Steve Squeri, on the other hand, predicted that loss rates would grow gradually this year while remaining considerably below pre-pandemic levels.

The company increased its provision for credit losses by $410 million, reflecting comparable increases at big US banks, and stated that it plans to set aside additional funds.

“What I have seen a correlation between … people losing their jobs and not being able to pay their bills. And so that’s potentially an issue down the road,” Squeri said.

The number of Americans applying for unemployment benefits increased for the third week in a row last week, reaching an eight-month high, indicating that the economy was faltering due to rising interest rates and soaring inflation.

For the time being, though, AmEx is benefiting from bottled-up demand and the loosening of COVID-19 limits, which have triggered the busiest summer travel season since the pandemic began.

Strong consumer spending has been a component of the company’s profitability for several quarters, but the recovery in foreign and business travel was the main driver this time, according to Morningstar stock analyst Michael Miller.

“A growing premium cardholder base generates a positive cycle for American Express,” he continued.

The company added 3.2 million new proprietary cards in the quarter ended June 30. Its net income of $2.57 per share beat the $2.41 expected by analysts, according to Refinitiv data.

Next week, rivals Visa and Mastercard will report earnings.

(Adapted from USNews.com)