Perc Pineda, PhD
Chief Economist, Plastics Industry Association
While the plastics industry’s growth will largely continue to track overall U.S. economic growth as a mature sector, the effects of policy changes and geopolitical developments will remain uneven across its value chain — from feedstocks and resins to processing, end-use manufacturing, and recycling.
Strong Macroeconomic Backdrop
The U.S. economy expanded at a 2.0% annualized rate in the first quarter of 2026, according to the Bureau of Economic Analysis advance estimate. Given that plastics are widely used across durable goods, nondurable goods, and services, the industry’s growth outlook remains positive, albeit subject to quarter-to-quarter variations. Real personal consumption expenditures rose 1.6%, supported by solid 2.4% growth in services, while durable goods spending was flat and nondurable goods spending edged slightly lower.
Business investment provided stronger momentum, with gross private domestic investment surging 10.4%. Equipment investment jumped 17.2%, and intellectual property (IP) products — partly driven by increased AI investment — rose 13.0%, pushing IP investment as a share of GDP to 7.0%, up from 5.6% in the first quarter of 2021. The expanding investment and use of AI, which runs on distributed computing infrastructure using multi-materials including plastics, supports a constructive outlook for the sector.
Moderate Growth with Mixed Labor Signals
Despite this broader expansion, plastics manufacturing grew only moderately in the first quarter. Manufacturers’ value of shipments for plastics and rubber products (NAICS 326) rose for the third consecutive month, reaching $25.7 billion in March 2026—matching the recent peak from April 2023.
However, labor market signals were mixed. The unemployment rate in plastics and rubber products manufacturing climbed from 1.1% in January to 5.0% in April, even as average weekly hours for production workers remained elevated above 41 hours. This indicates sustained labor utilization despite a modest decline in payroll employment. This volatility is typical for the sector and stood out against a relatively stable broader labor market.
Energy Costs and Geopolitical Pressures
A recent headwind for the industry has been rising energy costs. Higher energy prices affect the broader economy, and manufacturing is no exception. Recent oil price volatility tied to geopolitical tensions involving Iran has renewed concerns about inflation and energy supply disruptions. Plastics product manufacturing prices, for instance, rose 1.9% year-over-year in March and accelerated to 3.0% in April, based on the Bureau of Labor Statistics’ Producer Price Index. Meanwhile, increasing electricity demand from AI data centers, manufacturing activity, and households is adding further strain to energy markets, contributing to tighter supply-demand conditions.
Plastic materials and resins, being globally traded commodities, are particularly sensitive to international supply-demand shifts. The U.S. plastics industry remains relatively well supplied, benefiting from abundant domestic natural gas as its primary feedstock rather than crude oil. Still, disruptions to global naphtha and polyolefins supply chains have generated episodic price volatility. U.S. plastics manufacturers have continued to meet stable domestic demand,* facing temporary price swings rather than structural material shortages.
Inflation Outlook
Looking ahead, forecasters in the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters now project headline CPI inflation to average 6.0% at an annual rate in the second quarter of 2026, up sharply from the prior 2.7% projection. Core CPI is expected to rise to 3.2%. These revisions are largely attributed to the Iran conflict’s impact on energy and commodity markets. Inflation is projected to moderate to 3.0% in the third quarter, assuming the geopolitical situation improves. Overall, the U.S. plastics industry remains resilient amid a supportive macroeconomic and technological backdrop, even as it contends with geopolitical energy volatility and episodic cost pressures. The industry’s ability to navigate these internal and external shocks will help shape performance through the remainder of 2026. Members are also encouraged to visit the USITC website to submit comments directly or reach out to PLASTICS to have their perspectives represented.
