The Plastics Industry Association (PLASTICS) Chief Economist, Dr. Perc Pineda, has released a new economic analysis detailing the impact of the recent 44-day U.S. government shutdown and its implications for the plastics industry. Despite the substantial macroeconomic cost, PLASTICS’ analysis shows that the industry’s role in federal procurement remained steady, underscoring plastics’ strategic importance across both defense and nondefense government functions.
Dr. Pineda explains, “Aside from the macroeconomic impact of the government shutdown on the plastics industry, the sector’s direct exposure to U.S. government spending can be measured by the amount of plastic products embedded in final demand. PLASTICS estimates this at $9.5 billion in 2024.”
“The $9.5 billion in federal spending on plastic products highlights the plastics industry’s integral role in supporting both defense and nondefense functions of the U.S. government. By providing materials and products embedded in critical operations and services, the industry not only directly underpins government operations but also indirectly serves the broader needs of American society. This demonstrates that, while macroeconomic shocks such as a government shutdown can affect overall demand, the plastics industry maintains a measurable and strategic presence in federal procurement,” concluded Dr. Pineda.
The economic concept of value added refers to the amount by which the value of an article increases at each stage of its production, excluding initial costs. The government shutdown that began on October 1, 2025, and finally ended after 44 days, became the longest in U.S. history. On October 29, when the end of the shutdown was still uncertain—the Congressional Budget Office (CBO) released its estimate of the permanent economic loss. According to the CBO, a brief shutdown would have cost the U.S. economy roughly $7 billion.[1] But as it stretched to six weeks, the estimated loss climbed to about $11 billion — and could have reached $14 billion if it extended to eight weeks. Additionally, the CBO projected that the shutdown could reduce fourth-quarter real GDP growth by roughly one to two percentage points.
The government shutdown ultimately lasted 6.3 weeks, and based on CBO estimates, it cost the economy roughly $11 billion. Should the U.S. economy slow in the fourth quarter as a result, the plastics industry will feel the effects. After all, the plastics industry is a mature sector, and its growth tends to track overall economic growth—or growth in GDP—closely.
Why the Shutdown Didn’t Shift Plastics Demand
It is unlikely that the share of plastics in federal goods and services demand changed significantly during the 44-day shutdown. Federal procurement in the U.S. is primarily governed by the Federal Acquisition Regulation (FAR), which sets the rules and guidelines for how agencies purchase goods and services. Notably, federal procurement is generally based on an annual budget covering the fiscal year from October 1 to September 30. Any observable effects of the shutdown would appear in current fiscal-year spending, rather than in long-term procurement patterns. From a broader perspective, government purchases of goods and services are recorded quarterly and expressed as flows (dollars spent per period), which are then reflected in the following quarter’s GDP estimates.
Plastics on the Government’s Balance Sheet
Aside from the macroeconomic impact of the government shutdown on the plastics industry, the sector’s direct exposure to U.S. government spending can be measured by the amount of plastic products embedded in final demand. PLASTICS estimates this at $9.5 billion in 2024. Of this total, federal defense spending accounts for $5.7 billion, covering plastic products used in a wide range of areas such as scientific research and development services, automobiles, light and heavy-duty trucks, aircraft, guided missiles and space vehicles, shipbuilding and repair, among others.[2] Nondefense spending contributes an additional $3.8 billion.
The $9.5 billion in federal spending on plastic products highlights the plastics industry’s integral role in supporting both defense and nondefense functions of the U.S. government. By providing materials and products embedded in critical operations and services, the industry not only directly underpins government operations but also indirectly serves the broader needs of American society. This demonstrates that, while macroeconomic shocks such as a government shutdown can affect overall demand, the plastics industry maintains a measurable and strategic presence in federal procurement.
