Is Your Veterinary Practice Ready for What's Coming? New Research Reveals Where We're Headed

If you've been feeling like things are slowing down at your veterinary practice, you're not imagining it. New research using advanced economic forecasting confirms what many practice owners are experiencing firsthand: the veterinary industry entered a recession in November 2024, and we're likely not out of the woods until sometime in 2026.

But here's the good news: understanding where we are in the economic cycle—and where we're headed—can help you make smarter decisions today that set your practice up for success tomorrow.

The Myth of "Recession-Proof" Veterinary Medicine

For years, the veterinary industry has been called "recession-proof" or "recession-resistant." The reality is more nuanced. Veterinary medicine does experience its own distinct economic cycles, but they don't always mirror what's happening in the broader economy. In fact, research suggests the veterinary industry can lag behind general economic trends by up to seven years.

What drives these cycles? Consumer disposable income, pet adoption rates, and overall economic sentiment all play major roles. When people have less money in their pockets or feel uncertain about the future, veterinary spending tends to follow.

Where We Are Right Now

The research team used sophisticated forecasting models to analyze veterinary-specific inflation and spending data going back to 2000. Their models incorporate factors like industrial production, consumer sentiment, and disposable income to predict where the industry is headed.

Their findings? Real spending on veterinary services has been declining over the past year, and the forecasts show negative growth continuing throughout 2025. There's a possibility of recovery beginning around the second quarter of 2026, but there's still considerable uncertainty around that timeline.

Veterinary inflation, which spiked dramatically after the COVID-19 pandemic, has been cooling down—but the combination of slower spending and lingering higher prices creates a challenging environment for practices.

The Four Phases Every Practice Should Understand

The researchers identified four distinct phases in the veterinary business cycle, each requiring different strategic approaches. Think of it like the seasons—you wouldn't wear shorts in January or plant a garden in November. Similarly, what works in an expansion phase can be disastrous during contraction.

Recovery: Planting Seeds for Growth

This is when things are still tough, but there are early signs of improvement. Activity is still down compared to last year, but the rate of decline is slowing or just starting to turn positive. Most people in the market are still pessimistic, which is exactly why this phase offers opportunities.

Smart moves during recovery include investing in equipment and infrastructure while prices are still favorable, rebuilding your team before the competition heats up, and launching marketing campaigns that will gain momentum as confidence returns. It's also the time to strengthen relationships with suppliers and negotiate better terms. Leadership attitude matters enormously here—your team is watching to see whether you're hopeful or hunkering down, and that sets the tone for the entire next cycle.

Expansion: Riding the Wave

This is the good times—growth is not just positive but accelerating. Appointments are up, clients are spending more, and optimism is high. But expansion requires discipline. It's easy to get sloppy when everything seems to be working.

During expansion, focus on maintaining quality while you scale. Implement strong standard operating procedures so consistency doesn't slip as volume increases. Invest heavily in staff development and retention—great team members have more options during boom times. Review your pricing regularly and don't be afraid to adjust for your value. Build cash reserves now because the cycle will eventually turn. And if you've ever thought about selling your practice, expansion typically offers peak valuations.

Contraction: Reading the Warning Signs

This is the trickiest phase to recognize because things still look pretty good on the surface. You're still growing compared to last year, but the rate of growth is slowing. Maybe you're hitting your revenue targets, but it's taking more effort. Maybe new client acquisition is down, but existing clients are still coming in.

The danger is maintaining expansion-phase spending when momentum is already shifting. During contraction, preservation becomes the priority. Delay major capital purchases unless they're absolutely critical. Take a hard look at your services and eliminate the ones that aren't pulling their weight. Tighten up your accounts receivable—don't let outstanding balances linger. Avoid signing long-term contracts at peak prices. And double down on client communication and relationship building, because loyalty will matter even more when times get tougher.

Recession: Reset and Prepare

When both activity and growth rates are negative, you're in recession. It feels uncomfortable, but it's also a strategic opportunity if you approach it correctly. The frantic pace of busier times has slowed, giving you space to think strategically.

Use recession to streamline operations and cut inefficiencies you've been tolerating. Develop new service offerings that you'll launch when recovery begins—maybe telemedicine options, subscription wellness plans, or specialized care packages. Let underperforming staff leave through natural attrition rather than expensive terminations. Introduce budget-friendly service options that appeal to price-conscious clients while protecting your margins through smart bundling. Renegotiate vendor contracts and leases when you have more leverage. And identify the equipment and infrastructure you'll need when growth returns, so you're ready to move quickly.

The practices that emerge strongest from recession are the ones that use the time wisely rather than simply trying to wait it out.

What This Means for Your Practice

Understanding these cycles doesn't just satisfy intellectual curiosity—it should drive real decisions. If we're currently in recession with another year or more to go, what does that mean for your 2025 plans?

Maybe it means postponing that major renovation or new location until you see clearer signs of recovery. Maybe it means being more selective about hiring, focusing on versatile team members who can wear multiple hats. Maybe it means getting creative with service offerings to meet clients where they are financially. Maybe it means strengthening relationships with your most loyal clients rather than expensive campaigns to attract new ones.

It also means preparing for recovery. When the cycle turns—and it will turn—practices that are positioned with strong operations, good cash reserves, a trained team, and ready-to-launch growth initiatives will capture disproportionate gains.

The Bigger Picture

This research also carries important implications for the industry as a whole. Policymakers and veterinary associations shouldn't assume that general economic indicators tell the full story about veterinary practice health. The industry needs its own monitoring and support systems that recognize its unique patterns.

For practice owners, the key takeaway is this: economic cycles are inevitable, but how you respond to them isn't. Understanding where you are in the cycle, accepting that reality rather than fighting it, and aligning your strategy accordingly can mean the difference between just surviving and positioning yourself for long-term success.

The researchers maintain an updated economic dashboard with the latest forecasts, recognizing that these models need regular updating as new data comes in. While the current outlook suggests challenging times ahead, having a clear framework for understanding and responding to these cycles is itself a competitive advantage.

The practices that thrive long-term aren't the ones that get lucky with timing—they're the ones that adapt their strategies to the season they're actually in.

Read full article here: Anticipating the downturn: business cycle forecasting for veterinary practice strategy in the United States