Consumer Spending Goes to the Dogs (and Cats)
In this year of the great belt tightening pet owners continue to give themselves a long leash to keep shelling out for Fido and Fluffy. The American Pet Products Association
we’ll spend $45.5 billion on pets this year, a 5% increase since 2008 and a near 60% jump from our 2001 pet outlays. This comes at a time when June retail sales were about 10% lower than a year earlier and a Gallup survey of weekly consumer expenditures in mid-August was nearly 30% lower from a year ago.
Pet expenditures aren’t merely a kibble and kitty litter story. The APPA reports that 19% of pet owners admit to buying a “designer” item. Exhibit A: The $935 price tag for the large version of
this cat condo
would cover a few months of mortgage payments for plenty of
on the market.
But it’s not just about the pet bling. Basic food and care is driving some very big bottom lines. Nestle
a 9% year-over-year pickup in its pet care division; PetSmart recently doubled its dividend payout, and drug maker Sanofi-Aventis SA is paying Merck $4 billion to buy its 50% share of animal health-care manufacturer Merial. Sanofi’s CEO told The Wall Street Journal that Merial sales are up 50% the past five years and the firm’s operating margin is near 30%.
I know all about that trend; the epileptic dog sleeping at my feet as I write this requires twice-daily medication, and will see her vet more this year than I have seen my primary care physician in the past decade.
But I just had to sigh in disbelief at a House Resolution introduced last month that would allow an annual tax deduction of up to $3,500 a year for “qualified pet expenses." No, I am
not making this up
. As Howard Gleckman so pithily wrote at the
blog, this non-essential tax break seems a bit out of touch for the times given the massive federal deficit. What’s your take on this pet project?