Americans are spending more and more on their

pets. And at Morris Animal Inn, cats are also

vacationing in style.

The inn offers luxury accommodations, including

condos and kitty suites with plush beds and TVs.

Meals for pets just like this one made with human

grade ingredients. That's become the standard for

the emerging trend of fresh dog food.

U.S. pet spending hit $72 billion in 2018.

About $3 billion more than the year before.

And if you look at the data since 1994, you can

see how rapidly the industry is growing.

The pet industry's growth isn't showing any signs

of slowing down. In the United States, the number

of dogs and cats could increase faster than the

human population, according to one forecast.

People are even taking out pet insurance plans to

help pay for medical procedures and help their

pets live longer. Here's how Americans' love for

pets turned into big business.

Americans love pets.

In 2018, about two out of every three U.S.

households owned a pet.

Dogs and cats remain the two most popular

companion animals in U.S.

homes. Birds and horses come in at a distant

third and fourth on that list.

The number of cats and dogs in the United States

is predicted to increase at a faster rate in the

U.S. population in the five years from 2019 to

2024. Humans and their pets are attached at the

hip. Once a clear delineation between master and

servant, the human pet relationship has changed

significantly over the last 30 years and brought

humans and animals far closer together.

Years ago, we didn't fully understand animal

welfare as well as we do now.

So what people did with their animals before,

which was commonly accepted, might, for instance,

include things like tying your dog outside to a

dog house. We now see that that's not really

appropriate to just tie a dog out there for a

number of reasons, not least of which is that

there are weather issues and the dog is not

getting enough social interaction.

I think through our advanced understanding of

animal welfare, we're starting to realize that

these are social creatures that want to spend

time with us. That was Nancy Gee.

In 2017, she and Rebecca Fox published a paper in

which they concluded that since the late 20th

century in Great Britain, the relationship

between humans and animals had become more

intense and responsible.

People are seeing maybe their pets more as not

necessarily humans, but maybe as part of the

family. Sort of recognizing that they're not just

an animal, but that they're an important

individual who is important within the family,

that kind of thing.

And I'm not saying nobody did that before.

But I think it's a lot more common and a lot more

accepted now. Historically, people only spent

money on their pets when the economy was booming.

But with pets moving closer to family status, pet

owners are more likely to pay for their pet's

needs during tough times.

Industry experts call this phenomenon pet

humanization. And here's who's driving.

The pet industry's growth of late is in part

coming from demographics.

You have the aging demographic, the empty

nesters, and they're having more and more pets

because they don't have children anymore.

But also, you have the millennials who are coming

in and delaying the raising of children and

they're having more pets.

And you put those two together.

And in the U.S. today, seven out of ten

households have pets, and that's twice the number

that have children. Humans are going beyond basic

food and vet services.

We've begun to treat our pets the same way we

treat ourselves. To that end, pet owners are

purchasing indulgent items like premium pet food,

daily supplements, tech gadgets, clothing and

even matching streetwear.

We conducted a completely unscientific poll at

CNBC to see how much people spend on their pets.

This is Bubba. He's an eight-year-old pit bull

and he loves sleeping and our family loves him so

much. We spend about $1700 on him a year.

The most expensive thing we get for him is his

monthly allergy medicine.

That's about $100 a month.

He has to have a special food for his allergies,

which is about $60.

We spend about $45 on her litter and hay and just

food in general every two months.

Our other pets are a little more expensive.

My two shepherds, it costs about $110 a month to

feed them. $60 every two months to get them

groomed. They're both on pills from the vet.

So $45 each a month.

I'd say for the year in general it's about $800

just for their vet costs combined.

This is Chewy. He's 14-years-old and he's the

fourth dog I've owned. We spend about $150 a

month on him just between treats and dog food.

But we don't do pet insurance.

We've never really seen a need for it.

This is Oliver. He's 11-years-old and we have

spent a good amount of money on him buying him

ridiculous things like Halloween costumes.

We did not get him health insurance and we should

have done that because he's had Lyme disease

three or four times.

But he's our family member and we, we love him.

The average U.S. household spent $662 on their

pets in 2018.

That's a slight decrease from 2017, but it still

represents massive growth from 2013.

Investors are itching for a way to make money off

of the booming trend. One way to get a heartbeat

of the industry has been through exchange-traded

funds, a collection of stocks tied to one index

or in this case, one industry.

ProShares has an ETF called PAWZ that tracks

public companies in the pet industry.

Our ETF follows the FactSet Pet Care Index.

And in Q2, as an example, those companies grew

their earnings 12 percent.

And this is an environment where we all know that

earnings growth is very hard to come by.

So it's translating into the bottom lines of

these companies. Just a little bit less than two

thirds of the ETF are pet health care focused

with the rest being pet supplies and retail and,

of course, pet food.

And it's not surprising that a good chunk of this

is in the pet health care business because that's

where much of the growth is in the opportunity in

pet care. You know, pets are getting older and

they're needing more and more health care and

people are treating their pets like they're

members of the family.

So there's tremendous investment there,

tremendous opportunity.

And the way I like to think about it, there is no

Medicaid for dogs.

There's a real opportunity to make money there

that isn't as influenced and impacted by public

policy and government decisions.

Meet Dave Westenberg.

He's an analyst at Guggenheim and he wrote a 138

page report for investors on the pet industry.

It looks at where the future of pet care is

headed by 2024.

He writes that the industry became attractive to

investors after the recession of 2009 when

everyone was struggling to find growth.

He also writes that: "A six percent growth rate

with resistance to recession is a good profile

for companies, particularly in the post great

recessionary economy."

Stocks in the animal health group have gone up

208 percent since 2014.

The S&P 500 in comparison gave investors a return

of 48 percent during the same time period.

Veterinary services make up a big chunk of pet

spending. In 2018, U.S.

households spent an average of $662 on their

pets. Just more than a third of that came from

vet bills. There's three major drivers of

veterinary spending.

One is price in which is correlated with GDP,

rise in pet growth overall, which is a one to two

percent as well. And then there's service

intensity and service intensity is essentially on

the veterinary business becoming better

businesses and that has equaled roughly the six

percent growth phenomenon.

Medical care for pets is getting more and more

advanced. Pets now get C.T.

scans, transplants, dentistry and chemotherapy.

Owners want them to live longer and healthier

lives. And as the vet bills pile up, more

consumers are turning toward pet insurance plans

rather than paying for procedures out of pocket.

Right now, fewer than one percent of pets in the

U.S. are insured. However, that number is

expected to rise.

In Sweden, for example, 30 percent of pets have

insurance policies. In the United Kingdom, about

23 percent do.

The pet insurance industry alone could be worth

two billion dollars by 2024.

Employers are now starting to offer pet insurance

plans as a work perk.

The biggest markets for insurance you actually

also find this urban environment.

Correlated with this urban environment is the

access to these things, such as veterinary,

acupuncture, oncology, dermatology.

They're all really expensive services.

And so this is all intertwined.

The kind of customers that want to go to these

kind of places are also going to be the ones that

buy insurance. And more visits to the

veterinarian, coupled with the growing pet

insurance industry, also means that there could

be a surge in veterinarian jobs.

The Bureau of Labor Statistics predicts that by

2026, more than 57,000 veterinarian jobs will be

added to the economy.

That's an increase of 19 percent since 2016.

As investors pile into pet stocks, it's easy to

overlook what the underlying forces behind the

industry's growth means for our dogs and cats

themselves. It's part of a decades-long trend of

animal rights and protection.

It means that their lives are getting better and

longer. If you look back at the history of animal

welfare agreements, I guess it was sort of in the

19th century that they started making laws to

protect animals.

So things like the RSPCA go back to that period

and there was kind of movements to protect

animals, obviously in the late 20th, early 21st

century they've increased a lot.

And I think that's for two things, partly because

maybe animals are given a higher status.

But I think it's also because of the society we

live in now, it has to be more regulated as well.

So a lot of those laws that discussed in that

paper, not necessarily just for the animals'

benefits, kind of regulating them to make them

fit in with human society as well.

Fewer pets are being put down at animal shelters

now. In the 1960s, one out of every four dogs in

the United States used to live on the street.

To address the national issue, advocacy campaigns

pushed dog owners to become more responsible by

sterilizing, microchipping and licensing their

pets with their local municipalities.

On the legislative stage, Congress introduced a

bill called the 'Welfare of Our Friends' or the

Wolf Act in February twenty nineteen.

It would revoke licenses of dog breeders who

violate standards of care.

In January, twenty nineteen lawmakers introduced