Perc Pineda, PhD
Chief Economist, Plastics Industry Association
Our association recently released its annual Size & Impact Report, which quantifies the economic footprint of the U.S. plastics industry. The 2026 report shows that U.S. plastics shipments grew 0.9% in 2025 to $533.6 billion—an upward revision from the 0.5% decline projected in the previous report. When suppliers to the industry are included, the total economic impact of plastics manufacturing reached $715.8 billion. Supporting this activity required 1.7 million jobs, a 0.8% increase over the past decade even as overall U.S. manufacturing employment declined 0.3%. The report’s outlook for the current year remains resilient, underscoring the plastics industry’s continued economic importance to the U.S. economy.[1]
Economic backdrop
As a mature industry, the U.S. plastics industry tracks the overall growth of the economy – measured by gross domestic product (GDP). The fact that the U.S. economy has been growing above trend, since the second quarter of 2021, is consistent with the resilient growth in U.S. plastics manufacturing. This year, first and second quarter GDP growth rates continue to support the stable demand for plastics.[2] Other macroeconomic indicators have remained supportive for U.S. plastics manufacturing.
The current labor market of the U.S. economy has been characterized by many as a “low-hire, low-fire” labor market environment, suggesting an economy that is at full employment. While monthly plastics industry unemployment rate is more volatile than overall manufacturing, the plastics industry continues to hire more workers.
Interest rates and investment
On September 16, the Federal Open Market Committee unanimously raised the federal funds target range by 25 basis points to 3.75%–4.00%—the first rate increase in three years. The increase raises borrowing costs across the economy, particularly for short-term credit. The prime rate, for example, rose to 7.0% on September 17. The Fed’s decision reflects persistent inflation. Its September economic projections show inflation remaining elevated in 2026 before moving lower, while the median projection for the federal funds rate is 4.1% at the end of 2026. This suggests that another increase remains possible, although the projections do not constitute a commitment to further hikes.
The current inflation environment also reflects both demand and supply-side pressures. Energy commodity prices have contributed to the recent resurgence in inflation, while economic activity has remained solid. The Fed noted that domestic spending has been resilient, productivity growth strong, and capital investment robust.
Higher borrowing costs can nevertheless affect both consumers and businesses. For consumers, higher rates increase the cost of credit and can reduce purchasing power. For businesses, higher financing costs can weigh on investment spending. In the plastics industry, capital expenditures fell 13.2% from 2022 to 2023, when the federal funds rate reached its recent peak. Between 2024 and 2025, as shown in this year’s Size & Impact report, plastics industry capital expenditures increased from $11.4 billion to $11.9 billion as the federal funds rate moved down from its 2023 peak.
Outlook
That said, the recent improvement in plastics manufacturing suggests that the latest 25-basis-point increase should not, by itself, derail the industry’s recovery, as outlined in this year’s Size & Impact report. Based on current production data, and assuming no further rate increases for the remainder of 2026, plastics manufacturing should remain on track for its next phase of growth. However, the outlook remains subject to other factors, including geopolitical developments that could trigger spikes in energy prices.
[1] 2026 Size & Impact Report. Plastics Industry Association. www.plasticsindustry.org
[2] Plastics Demand Estimate. Plastics Industry Association. www.plasticsindustry.org
