The global chemical industry is experiencing a significant downturn, primarily due to an excess of new production capacity. While the United States chemical sector has avoided widespread plant closures, the outlook remains bleak, with slow growth ahead. According to the American Chemistry Council (ACC), the U.S. chemical industry is projected to grow by just 0.3% in 2026, a decline from 0.7% growth in 2025. A more substantial recovery is not expected until 2027, when growth could reach 2.3%.
Economic Pressures Impacting Growth
The U.S. chemical sector is navigating a challenging economic landscape marked by various pressures. High tariffs are constraining trade, while unemployment rates are gradually rising. The broader industrial sector has been experiencing a prolonged slump. As noted in the ACC’s latest report, “High interest rates, higher prices for imported equipment and materials, and a highly uncertain economic landscape have curtailed or delayed investments.”
Despite these challenges, certain segments of the economy are providing some support. Investment in data centers, driven by the surge in artificial intelligence, has bolstered business spending. The ACC highlights a dichotomy in business investment, stating, “Business investment has also been a tale of two segments—AI and non-AI.” This mixed economic environment has led to a contrasting performance in stock markets, with stocks benefiting from the AI boom.
Specific Sector Trends and Predictions
In the automotive sector, Cox Automotive reports that 2025 was the strongest year for U.S. auto sales since 2019, with 16.3 million new vehicle sales. However, the firm predicts a decline to 15.8 million sales in the upcoming year, influenced by factors such as slower economic growth and reduced job creation.
The housing market is another area to watch, with economists at the National Association of Realtors forecasting a potential rebound. They predict that declining interest rates will make mortgages more affordable, leading to a projected 5% increase in new home sales by 2026. Neil Ghosh, global head of chemicals at Truist Securities, believes that a revitalized housing market would benefit chemical manufacturers significantly. “The construction end market, which is a big buyer of chemicals—you almost have to think that the only way that market will go is up,” he stated.
Despite these positive signs, the ACC anticipates that U.S. chemical output will remain sluggish in the near future. The report indicates that production cost advantages for U.S. petrochemical makers, which have been in place since the early 2010s, are likely to persist. “With continued gains in ethane production driven by continued gains in natural gas production, our competitiveness remains very, very positive for U.S. chemical manufacturing,” said Martha Gilchrist Moore, the ACC’s chief economist.
While U.S. exports of plastic resins increased by 2.7% in the first nine months of 2025, there is concern about the slowdown in the development of new large projects. According to Shruthi Vangipuram, principal analyst of base chemicals at Wood Mackenzie, major new projects have significantly declined since the boom years of the late 2010s. The upcoming $8.5 billion Golden Triangle Polymers joint venture in Texas, a collaboration between Chevron Phillips Chemical and QatarEnergy, is one of the few exceptions.
Vangipuram highlights the cautious approach taken by major players in the industry. “Over the past year, ExxonMobil elected to ‘slow the pace’ of a project in Texas, while, in Canada, Dow delayed a big project,” she explained. This trend underscores a broader issue: while the U.S. chemical industry remains relatively insulated from global rationalization efforts, the overall investment pipeline appears weak.
As the chemical industry grapples with these challenges, it faces a future marked by uncertainty and slow growth. Despite the promising signs in specific sectors, such as housing and artificial intelligence, the overall outlook remains cautious as companies navigate the complex economic landscape.
