On Discover’s earnings call CEO Roger Hochschild revealed how much spending on Discover Cards is down so far this month,
So far in April, everyday sales are down 14% year-over-year. Discretionary spend is down 33%, driven by the travel category, which, although only 8% of cardholder spending, is down 99%, and by retail, which is down 11%.
American Express chief executive Stephen Squeri told a similar story last week,
Cardholders’ spending has stabilised in April at levels more than 20 per cent below the pre-crisis norm, the company said. Much of the decline is linked to travel and entertainment, which makes up almost a third of spending on Amex cards and is down 95 per cent.
…The company said 845,000 customers had enrolled in its pandemic relief program, which allows for payment deferrals without penalty.
Two months ago I said we were already in recession and just didn’t know it yet. I don’t think we’re going to get out of this recession quickly. But even when we do, the Amex CEO says that the growth in more work-from-home will mean less business travel going forward.
On Friday, Amex Chief Executive Stephen Squeri noted that the development of remote-work capabilities could become a long-term drag on business travel.
“There will be less of those trips that are needed. And so I think you will see an inevitable decline in probably air travel,” Mr. Squeri said. He said consumer travel may rebound faster.
Travel spend won’t lead us out of the recession, it may lag even when the economy begins to recover.