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Credit card giants see consumer spending 'remarkably resilient' amid recession fears

Quarterly results from credit card giants Mastercard (MA), Visa (V), and American Express (AXP) out this week added further evidence consumers remain in good shape amid elevated inflation and swirling recession fears.

"We aren't seeing recessionary signals," American Express CEO Stephen Squeri told Yahoo Finance's Brian Sozzi on Friday.

These comments echo similar notions set forth by Squeri's peers at Mastercard and Visa just a day before.

"While macroeconomic and geopolitical uncertainty persists, consumer spending has been remarkably resilient," said Michael Miebach, Mastercard CEO, in the company's earnings statement on Thursday. "We are well prepared to adjust our investment profile quickly if needed."

Visa CFO Vasan Prabhu told analysts on the company's call Thursday afternoon, "business trends have been remarkably stable." At the end of the firm's fiscal year — which wrapped up in September 2022 — Visa planned for no recession hitting its business in fiscal 2023. Right now, the company sees "no evidence" of a change in that trend.

Shares of American Express were up about 10% on Friday following its quarterly results, while Visa stock gained about 2%. Mastercard, which reported results before the open on Thursday, saw shares little-changed.

Results from these companies come as fears over an impending recession in the U.S. abroad continue to dominate the conversation for investors.

The latest reading on GDP growth out Thursday showed the U.S. economy finished 2022 in a stronger-than-expected position.

Retail sales data for December out earlier this month, however, suggested some moderation to cap last year.

In a note to clients, Mizuho analyst Dan Dolev said both Mastercard and Visa provided volume data that showed slowing consumer purchases between November and December. However, unlike Mastercard, Visa added purchasing volume from January.

“Healthy U.S. January trends should offer a sigh of relief amid broader slowdown concern,” Dolev wrote.

Still, the divide between corporate readouts on real-time activity and economists modeling higher interest rates and a loss of growth momentum are clear across markets.

NEW YORK, NEW YORK - DECEMBER 27: People wait in long lines to enter the Harry Potter store in Flatiron on December 27, 2022 in New York City. According to a report by Mastercard, holiday sales rose to 7.6 % which is higher than was expected by lower than previous years. (Photo by Alexi Rosenfeld/Getty Images)
NEW YORK, NEW YORK - DECEMBER 27: People wait in long lines to enter the Harry Potter store in Flatiron on December 27, 2022 in New York City. According to a report by Mastercard, holiday sales rose to 7.6 % which is higher than was expected by lower than previous years. (Photo by Alexi Rosenfeld/Getty Images) (Alexi Rosenfeld via Getty Images)

In a note to clients on Friday, Paul Ashworth, chief North America economist at Capital Economics, wrote: "Calling a recession in real time is never a simple task. The data rarely all point in one direction at the same time. We start with the simple question: are there reasons to expect a recession? In this case, the answer is a resounding yes."

In Ashworth's view, last year's rise in interest rates and the firm's tracking of forward-looking economic behavior suggests the odds of recession starting within 6 months are 98%.

"If the model is wrong, that would turn out to be one hell of a false positive," Ashworth wrote. "That's why we are sticking with our forecast that the US economy will experience a mild recession beginning soon."

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