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Americans Will Spend $158 Billion on Their Pets This Year. Most Just Skipped the Vet.

Record pet spending and a nationwide affordability squeeze are both real at once. The result is a K-shaped pet economy — and the stocks have already picked a side.

Alpha One

25 Sep 2026 • 6 min read

Americans will spend a record $158 billion on their pets this year — and a majority of them just skipped a vet visit they knew their animal needed. Both things are true at once, and the gap between them is where the money is now being made and lost.

The American Pet Products Association put 2025 industry spending at $158 billion, up 3.7% from the year before, and projected $165 billion for 2026. Read the headline and the pet economy looks like what it has always been sold as: recession-proof, demographically bulletproof, growing on autopilot as 95 million households keep adopting. Read one layer down and it looks like something else entirely — a market splitting in two, with premium spenders pulling one way and cost-stressed owners pulling the other, while the public companies built for the old, all-boats-rise version quietly trade near multi-year lows.

This is the story of a K-shaped pet economy, and why "record spending" and "pets are recession-proof" are no longer the same statement.

The number that doesn't match the mood

Start with the topline, because it is real and it is strong. APPA's 2026 State of the Industry Report, released in May, pegs 2025 spending at $158 billion and forecasts roughly 4.4% growth in 2026 — of which the association attributes about 2 percentage points to inflation rather than real volume. Dog ownership rose from 51% of U.S. households in 2024 to 53% in 2025, roughly four million additional dog-owning households in a single year, with gains spread across Gen Z, Millennials and Gen X.

So far, so recession-proof. The problem is what "spending grew" conceals. When a big chunk of your growth is price, not more visits or more product moving off shelves, the topline can rise while the underlying activity falls. That is precisely what is happening in the single largest and stickiest slice of the pet wallet: veterinary care.

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Vet bills are the story

Veterinary services have been running hot for years. Federal inflation data put vet-services price growth in the mid-to-high single digits through 2025 — roughly 5.6% to 7.8% year over year depending on the month — versus general consumer inflation closer to 2.4% to 3%. That is more than double the headline rate, and it has compounded on top of the near-9% spikes vets posted in 2022 and 2023.

Here is the part the topline hides. According to the American Veterinary Medical Association, veterinary practice visits fell about 3.1% in 2025 — the fourth straight annual decline, after drops of 3.5% in 2022, 1.4% in 2023 and 2.6% in 2024. Revenue still rose about 2.5% in 2025, because prices climbed faster than visits fell. In other words: clinics are billing more for seeing fewer animals.

Owners are not confused about why. AVMA survey work found that 52% of U.S. pet owners reported skipping needed veterinary care in the past year — 37% declined one or more recommendations from their vet, and 15% did not bring the pet in at all for financial reasons. Among those who declined care or skipped annual visits, 71% cited money. And 81% of veterinarians said their clients were more cost-sensitive in 2025 than the year before, more frequently turning down non-essential diagnostics, procedures and preventive care.

The cuts land hardest on exactly the care that keeps costs down later. Wellness visits — the discretionary, preventive end — fell 3.8% in 2025, steeper than the overall decline. Dentistry, imaging, and spay/neuter are among the most frequently deferred procedures. This is the classic dynamic of a squeezed household budget: cancel the checkup now, pay for the emergency later.

Two pet economies, not one

Put the pieces together and the "recession-proof" label starts to look like an average hiding a split.

At the top, humanization is real and it is spending. Owners who can afford it are trading up to fresh and premium food, subscription health plans, insurance, tech, and boutique services — the premiumization wave that has powered the category's most-watched growth stories. Fresh pet food, telehealth vet consults, and wellness memberships are all growing because a cohort of owners genuinely treats the animal as a family member and budgets accordingly.

At the bottom — and it is not a small bottom — the math has stopped working. Lower-income households are the ones skipping the vet, deferring the dental, and trading down on food. Survey data has repeatedly shown that among the lowest earners, a majority say they simply cannot afford recommended veterinary care. When the same product line has to serve a premiumizing top and a rationing bottom, "the pet market" stops being one number and becomes two diverging trends that happen to sum to $158 billion.

That divergence is the single most important thing an investor can understand about this sector right now, and it is why the stocks have decoupled from the headline.

The market already voted

If pets were still a simple up-and-to-the-right story, the public equities built to ride it would be near highs. They are not.

As of this week, Chewy (CHWY) trades around $18.30 — near its 52-week low of about $17.40, and less than half its 52-week high above $40. Freshpet (FRPT), the fresh-food premiumization poster child, sits near $58, down from a 52-week high of $86. Pet-insurance pure-play Trupanion (TRUP) trades around $22, versus a high near $47. Petco (WOOF) is a low-single-digit stock around $2.30. PetMed Express (PETS) is around $1.55. Even the "picks-and-shovels" name — diagnostics maker IDEXX (IDXX), which sells the lab equipment vets buy regardless of visit mix — trades near $513, closer to its 52-week low of about $501 than its high near $770.

The pattern is not random. The whole sector has been repriced lower over the past year, but the damage is not evenly spread. The names most exposed to volume and discretionary spend — foot traffic, retail, subscription churn among stretched consumers, per-visit vet economics — have fallen hardest and sit nearest their lows, several of them down by half or more from their highs. That is the market pricing the affordability squeeze, not the ownership headline. The $158 billion topline says demand is fine; the equity curve says the profits attached to that demand are getting harder to earn. When those two signals diverge this sharply, the price action is usually the earlier read.

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What to actually watch

Three things will tell you which way the split resolves.

Visit volume, not revenue. Ignore the pet industry's topline dollar figure — it is contaminated by price. Watch AVMA and clinic-operator visit counts. A fifth straight annual decline in 2026 confirms the affordability ceiling is real and structural, not a blip. A rebound would mean the trade-down is easing.

The premium/value spread. Watch whether fresh and premium food keeps outgrowing the mass segment. If premiumization stalls — if even the top cohort starts trading down — the "recession-proof top" thesis is in trouble and the whole category re-rates lower.

Insurance and financing attach rates. Pet insurance penetration in the U.S. is still low by international standards. If more owners buy coverage or use financing, it smooths the affordability cliff and supports visit volume; if they don't, the skipped-care problem gets worse and the deferred-emergency bill eventually shows up. Trupanion's subscriber trend is the cleanest read on that.

The pet economy is not collapsing. Ninety-five million households are not going to stop feeding their animals. But "recession-proof" was always shorthand for "everyone keeps spending." What the 2026 data actually shows is that everyone keeps owning, while a growing share can no longer keep spending the way the industry's growth models assumed. That is a different market — and, as the stock prices have already decided, a different trade.

Sources & Further Reading

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