Where Are We Now?

As the U.S. veterinary profession continues to navigate evolving economic landscapes, a new study has challenged the long-held assumption that veterinary medicine is “recession-resistant.”

In fact, research, titled “Anticipating the Downturn: Business Cycle Forecasting for Veterinary Practice Strategy in the United States” published in Frontiers in Veterinary Science makes the case that the U.S. veterinary industry has entered a recessionary phase.

The study, led by Dr. Clinton L. Neill of Cornell University and Applied Economics Consulting, Dr. Matt Salois, president of Veterinary Management Groups, and Charlotte McKay, senior economist of Veterinary Management Groups, applies time-series econometric modeling to over two decades of U.S. veterinary industry data. The findings indicate that while veterinary service prices continue to rise, real client expenditures have slowed sharply, signaling an industry-specific recession that began in January 2025 and is projected to persist through mid-2026.

The following are three takeaways from the research:

1. Veterinary prices keep rising, but real expenditures are declining

The study shows that the consumer price index (CPI) for veterinary services — which reflects inflation in what clinics charge — has continued to climb, outpacing overall economic inflation at times since the pandemic.

However, when adjusted for inflation (i.e., real expenditures), the total amount clients are spending on veterinary services has stalled and begun to decline, indicating that pet owners may be cutting back or delaying care. This divergence paints a more nuanced picture of the “recession-resistant” claim and underscores how inflation can mask financial strain in the sector.

2. A distinct industry business cycle points to an ongoing downturn

By combining CPI and expenditure trends, the authors constructed a veterinary-specific business cycle metric — similar to what economists use for broader economies — revealing that the sector entered a recessionary phase in
late 2024. Forecasts suggest continued negative year-over-year growth through at least mid-2026, although uncertainty increases later in the projection period. While recovery into positive growth territory remains possible by the second quarter of 2026, the baseline outlook points to persistent contraction under “all else equal” assumptions.

3. Strategic practice adjustments will be critical

The recessionary signal carries clear implications for practice leaders. With a cooler demand environment, clinics may face pressure on revenues even as costs rise. The authors highlight opportunities for practices to reevaluate cost structures, strengthen workforce planning and innovate service offerings to maintain financial resilience. Strategic use of data, client communication about value and diversification of revenue streams could help weather the downturn.

Looking ahead

The authors also emphasize the need for dedicated veterinary economic monitoring to inform industry and policy decisions. They argue that veterinary sector trends are tied to consumer income and confidence but often lag behind national economic cycles by several years.

“Policymakers and industry leaders shouldn’t rely solely on national economic indicators,” said McKay. “Veterinary-specific tracking can help identify downturns earlier and support targeted measures to help practices and pet owners weather economic challenges.”

This analytic framework offers a forecasting tool for veterinary economics, equipping industry stakeholders with evidence-based projections and actionable insights. As practices adjust to slowing growth in real expenditures, forward-looking planning will be key to safeguarding both financial health and quality of care for patients.

“Recognizing where the industry sits in its cycle allows practices to make smarter business decisions — from hiring and inventory management to client pricing and investment timing,” said Dr. Salois.

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