Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Resin Prices
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
July 21, 2021 09:41 AM

Plastic product demand still not back to pre-COVID levels

Bill Wood
Economics Editor
Plastics News Economics Editor
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Getty Images/iStockphoto
    Total consumer spending so far this year, adjusted for inflation, has increased at a pace of 2.7 percent.

    The second half of 2021 is just barely underway, and in the next few days we will be deluged with an array of economic data and corporate earnings reports from the second quarter. This is the perfect time to review our forecasts and plans from the early part of this year, compare them with the actual data as it becomes available and make any necessary adjustments for the rest of the year.

    As this year got started, there were three dominant themes in my forecasts for the U.S. economy and plastics industry. The first important theme was the U.S. economy would enjoy accelerating growth in 2021 at a higher rate than the long-term average. The combination of lower rates of COVID-19, rising rates of vaccinations, a huge amount of fiscal stimulus from the federal government and a rapid recovery in the labor market would all promote a robust increase in a wide spectrum of overall consumer activity, and this would generate strong gains in total GDP.

    The second theme was there would be a gradual rotation in the consumer spending data away from goods and into services. This did not mean I expected consumer spending on goods, either durable or nondurable goods, to decline. In fact, I forecast solid gains in total spending for goods this year. But my forecast called for a deceleration in the pace of growth in spending for goods, and at the same time, the rate of growth in spending on services would start to accelerate.

    The third theme was the growth in the data that measures total output for the overall U.S. plastics industry would also exhibit positive growth this year, but the annual rate of growth for plastics would be slower than the pace observed in the economy as a whole. The plastics industry data performs best when the economy is strong, but I expected a number of factors would restrain the growth rate this year. These factors included both the macrorotation away from goods and into services, and also the industry-specific issues of increased regulations and market deselection of many types of plastic products.

    To check these forecasts, I have created a table based on the inflation-adjusted personal consumption expenditures (PCE) data compiled and reported each month by the Bureau of Economic Analysis. As a point of reference, total PCE accounts for approximately two-thirds of the total U.S. GDP. And consumer spending on services normally accounts for approximately two-thirds of the total PCE.

    For the sake of this particular table, I chose to make some adjustments to the way I would normally analyze the data. Specifically, I calculated the growth rates in 2021 by using 2019 data (pre-COVID) as the baseline. Typically, I would use the prior year's data to calculate growth trends, but as we can all attest, 2020 was not a typical year. Almost all segments of the consumer sector are better off than they were a year ago, but I want to know if spending patterns are returning to something close to normal.

    I created two columns for this table: one column that shows the YTD growth in the spending data for these categories, and one that shows just the latest available month. This allows us to identify recent changes in rates of spending for these categories, which in turn will offer some clues as to whether U.S. consumers are changing their spending patterns.

    Based on the latest available data, I would say my forecasts pertaining to consumer spending are holding up well, but the data for the plastics industry is causing some concern. Total consumer spending so far this year, adjusted for inflation, has increased at a pace of 2.7 percent. That is well above the annual average for this data set in recent years. And there was a rapid acceleration in the most recent month for which we have data, as the growth in May jumped up a hearty 3.4 percent over the same month in 2019. At the same time the vaccines were becoming more widely available, consumers responded by increasing their rate of spending.

    The pace of growth in spending for consumer goods held steady in the latest month. Spending on durable goods decelerated modestly, but this was partially offset by a modest acceleration in growth on spending for nondurable goods. To be fair, the changes represented on the table are not much different than the margins for error in this data, so I will say consumers' appetite for goods has not changed much since the start of the year. We also know that the motor vehicle sector has been negatively affected by supply chain issues, particularly with computer chips. That is likely having an impact on this data, but it is still too early to determine just how much.

    Steady gains in spending for goods indicates the acceleration in overall expenditures is due to increased spending for services. You will note that many of the categories are still negative when compared with 2019 levels — not yet back to normal, in other words. But many of these categories were far less negative in the latest monthly data than they were for the year to date. This indicates consumers are increasing their spending for these categories at an accelerating rate. Specifically, I wish to draw your attention to the categories of recreation, restaurants and personal care.

    Unfortunately, the overall demand for plastics products has not yet fully recovered to its pre-COVID level, and the data from the latest month indicates we are not making much progress so far this year. At this time, I do not have a precise knowledge of how much of this is due either to the supply chain issues that are currently impeding the production of some categories of durable goods, which are also huge end markets for plastics products (e.g., motor vehicles), or the rising trend of market deselection of some plastics products. So there is still much to learn in the second half of 2021.

    RECOMMENDED FOR YOU
    Australian startup Samsara to commercialize its enzyme recycling
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    PVC feedstock in train derailment prompts evacuation in Ohio
    2
    Material Insights: Resin prices rise, nonmarket correction for PE
    3
    Illinois AG sues 14 firms over PFAS contamination
    4
    Prices on the rise for PP, PVC
    5
    This is the year the reality of plastics EPR arrives in the US
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • PN Live: Mergers and Acquisitions
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Resin Prices
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified