Pet industry economics rebalances in 2026 as ownership changes
Macroeconomics, pet population shifts and inflation have created a new-new-normal in the post-pandemic pet food industry.
Tim Wall
The phrase “the new normal” became a buzzword during the COVID-19 pandemic. However, that normal didn’t last very long. Following a year or so of pandemic-fueled expansion, the U.S. pet industry may have entered a period of recalibration. Data from Cascadia Capital’s report “Winter 2025/2026 Pet Industry Overview” reflected how slower economic growth, declining dog ownership and inflation are collectively reshaping demand for pet food. While the pet food sector remains resilient, the near-term outlook is increasingly shaped by consumer caution and demographic shifts that are changing both the size and composition of the pet-owning population, along with the size and species of those pets.
K-shaped economy weighs on discretionary pet spending
Pet population growth and associated spending remain correlated to broader economic conditions. Through September 2025, macroeconomic indicators pointed to a cooling labor market and muted consumer confidence, contributing to a more cautious spending environment for pet owners.
Unemployment rose from 4.1% in June 2025 to 4.4% by September. At the same time, real average hourly earnings increased just 0.8% year over year through September, reflecting modest wage growth once adjusted for inflation. Consumer sentiment remained depressed relative to historical norms, driven by persistent inflation, tariff uncertainty, job security concerns and a recent government shutdown, according to Cascadia’s analysts. Inflation continued to pressure household budgets. The Consumer Price Index for All Urban Consumers rose 3% year over year in September 2025, with a 0.3% month-over-month increase. Although interest rates declined modestly compared with the prior year, rising unemployment and limited wage gains constrained discretionary spending, particularly among lower- and middle-income households.
These pressures have contributed to what Cascadia describes as a K-shaped economy, where higher-income households continue to spend on premium pet products while other consumers increasingly trade down or delay purchases.
Inflation trends within the pet industry remain uneven, influencing purchasing behavior across categories. In September 2025, overall pet inflation rose 3.5% year over year, exceeding the national inflation rate of 3.0%. However, pet food prices remained relatively stable, increasing just 0.5% year over year, Cascadia reported. In contrast, veterinary services rose 7.8% year over year, pet services increased 5.4%, and pet supplies rose 1.5%. Veterinary and total pet prices reached all-time highs in September, underscoring ongoing cost pressures across the category. Cumulatively, pet prices are now approximately 24% higher than in 2021 and 29% above 2019 levels.
Pet ownership declines, led by dogs
Against this economic backdrop, U.S. pet ownership has continued to retreat from pandemic-era highs. Dog ownership declined from 41% of households in 2019 to 38% in 2024, while cat ownership remained relatively stable at approximately 24% of households over the same period, according to Cascadia.
Several factors contribute to declining dog ownership, including rising living costs, housing affordability challenges and increased pet-related expenses such as food, veterinary care, grooming and insurance. These financial pressures have disproportionately affected lower- and moderate-income households.
Demographic and lifestyle shifts are also playing a role. Pet ownership among younger Americans has increasingly skewed toward renters, as high prices and mortgage rates discourage home ownership. This trend indirectly dissuades dog ownership due to space constraints and housing restrictions. As a result, the number of dog-only households in the U.S. declined from approximately 38.6 million in 2018 to about 35.2 million in 2024, Cascadia reported. In contrast, cat-only households increased from roughly 14.1 million to nearly 16.0 million during the same period.
Nevertheless, total households owning dogs or cats remained relatively stable in absolute terms, increasing slightly to 67.3 million in 2024. However, pet ownership percentage has declined compared to overall household growth, indicating that pet ownership rates are no longer keeping pace with population growth.
Shelter data further illustrate the evolving pet population. In 2024, shelter intakes of dogs and cats declined 1.4% compared with 2023, representing approximately 83,000 fewer animals entering shelters, according to data from Packaged Facts presented by Cascadia. Early data from the first half of 2025 indicate a further 4% year-over-year decline, with dog intakes steadily decreasing month to month.
Social media has emerged as an increasingly influential factor in pet adoption. Platforms such as Instagram and TikTok have expanded the reach of adoptable pets, accelerated adoption cycles and enabled shelters to raise funds through community initiatives. According to data cited in the Cascadia report, 86% of shelters reported increased awareness due to social media, and a single viral TikTok video generated more than 150 adoption applications for one cat.
While declining shelter intakes may reflect fewer pets overall, they also signal faster adoption cycles and changing engagement models, particularly among younger consumers.
Implications for pet food manufacturers
For pet food manufacturers, one interpretation of Cascadia’s report is that a more disciplined growth strategy may be needed heading into 2026, compared to earlier years. Slower pet population growth, declining dog ownership and persistent economic concerns are likely to constrain volume growth while intensifying competition at lower and higher price tiers. At the same time, stability in pet food price inflation relative to other pet categories may provide some insulation, particularly for brands positioned around value, nutrition and functional benefits. However, the divergence between premium and price-sensitive consumers suggests continued pressure on mid-tier offerings.
“The U.S. pet industry in undergoing a reset after 2024 marked its slowest year-over-year growth since before the pandemic,” wrote Cascadia’s analysts. “The category remains attractive to all stakeholders, as premiumization, wellness and longevity product and younger pet owners continue to shape its future evolution. Although the industry may not approach its pandemic growth heights in the near-term, it will continue to be a resilient, structurally growing category underpinned by favorable demographic and secular tailwinds.”
Fonte: petfoodindustry.com
