The Plastics Industry Association (PLASTICS) Chief Economist, Dr. Perc Pineda, has released a new economic analysis exploring the impact of the latest U.S. GDP data and the positive benefits for the plastics industry, particularly in packaging and automotive manufacturing.
The report from the U.S. Bureau of Economic Analysis showed that the U.S. economy expanded by 3.0 percent in real terms in the second quarter, following a 0.2 percent pullback in the first quarter. Based on the advanced GDP estimate, the economy’s output continues to run above its long–term trend.
“The U.S. economy’s 3.0 percent expansion in the second quarter is a welcome development for mature industries like plastics,” said Dr. Pineda. “With consumer spending remaining resilient and investment in industrial equipment on the rise, the plastics sector is poised to benefit from increased demand across key markets, including packaging and automotive manufacturing.”
Trade and tariff impact
The reversal in GDP growth – from a 0.2 percent decline to a 3.0 percent increase – was driven primarily by a significant decrease in imports, which subtract from GDP. Imports fell by 30.3 percent, with goods imports down 35.3 percent and services imports down 5.4 percent. Exports, which add to GDP, declined by 1.8 percent, reflecting a 5.0 percent drop in goods exports and a 4.4 percent increase in services exports. Based on these results, it’s easy to see how higher tariffs can temporarily boost GDP by sharply reducing imports.
Household sector stayed engaged
In addition to trade, consumer spending remained resilient in the second quarter. Real personal consumption expenditures (PCE) rose by 1.4 percent, a significant improvement from the 0.5 percent increase in the first quarter. Durable goods consumption rebounded by 3.7 percent, recovering from an equal decline in the previous quarter. Nondurable goods consumption slowed to 1.3 percent from 2.1 percent, while services consumption rose 1.1 percent. The continued growth in real PCE has positive implications for the plastics industry. For example, real PCE on food and beverages for off-premises consumption remained stable at $1.18 trillion in both the first and second quarters—indicating steady demand for food and beverage packaging. Additionally, real PCE on motor vehicles and parts rose from $593 billion in Q1 to $615 billion in Q2, potentially signaling increased demand for plastics in automotive manufacturing. As much as 87.6 percent of plastics manufacturing ultimately supports the consumption of goods and services, based on PLASTICS 2024 Size and Impact Report. This year’s edition of the report, which will be released on September 16th, will once again show the positive role plastics play in supporting household consumption of goods and services.
Business sector recalibrating investment across asset classes
The 15.6 percent decline in real private investment spending was driven primarily by a 10.3 percent drop in investment in nonresidential structures and a 4.6 percent decline in residential fixed investment – pointing to constrained growth in plastics demand for building and construction. Persistently high interest rates, combined with ongoing tariff uncertainty, continue to weigh on business investment decisions. However, investment in industrial equipment rose by 4.5 percent, consistent with the 4.7 percent gain recorded in the first quarter of 2025. While this increase may partly reflect the higher cost of imported equipment due to tariffs, it also suggests continued activity in industrial expansion. With overall U.S. manufacturing capacity utilization at 76.8 percent – and 71.3 percent in plastics and rubber products manufacturing – there is still room for growth.
Looking ahead, businesses that have invested in higher domestic manufacturing content are less likely to be affected by elevated tariff rates. Given the continued reliance on imported inputs and equipment, investment in industrial equipment will likely remain supported – as long as tariff rates do not become cost-prohibitive. Fair trade is something all industries can support. Notably, plastics may serve as a cost-effective substitute for other packaging materials that are no longer economically viable due to tariffs – reinforcing the industry’s role in supporting domestic production and supply chain resilience.
In the latest Plastics Quarterly Forecast, U.S. real GDP was projected to grow by 2.0 percent in the second quarter and 1.5 percent for the year. The International Monetary Fund now expects U.S. GDP to grow by 1.9 percent in 2025 and 2.0 percent in 2026. Achieving such growth will likely depend on resolving tariff-related issues between the U.S. and its major trading partners.
Published September 2025
