Long Islanders, like consumers throughout the Northeast, are unlikely to substantially increase their spending this year, so economic growth will be modest, a top banker said Thursday.
Consumer spending accounts for two-thirds of economic activity on the Island and across the country, said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management, the country's third-largest private bank.
"Wage gains will still be very, very limited, so I don't think we're going to see a meaningful uptick in consumer spending," he said in an interview after speaking at Hofstra University. "Consumer spending this year is likely to be in the low, single digits, like what we saw during the Christmas holiday."
Grohowski presented his 2014 economic forecast to a meeting of the New York chapter of the Association for Corporate Growth, a group of lawyers, bankers, investors and accountants who work with medium-sized businesses.
He told the audience of about 65 people that employment in Nassau and Suffolk counties, and nationwide, "is still not as strong as it should be."
He said companies are spending money on new equipment and other efficiency measures "but holding off on hiring" because of continued uncertainty about Obamacare, Washington politics and other events.
Grohowski noted Long Island's unemployment rate, at 5.4 percent in November, was far lower than rates for the state and nation.
In terms of investing, he called for greater diversification and suggested purchasing municipal bonds from Nassau County, Oyster Bay Town and other governments.
Grohowski said Nassau's 10-year bonds offer a tax-free return of about 3 percent, better than the yields of other municipal debt securities and Treasury bonds. He also said the risk of investing in Nassau was mitigated by the state control board that oversees county finances."State involvement avoids any default or anything resembling the Detroit situation," Grohowski said, referring to the Motor City's bankruptcy filing last year.