Report: U.S. economy growing, LI stagnating

The U.S. economy will grow moderately this year with increased spending by businesses, though Long Island could lag, experts said Tuesday.

Irwin Kellner, chief economist for MarketWatch.com, an information service, predicted the national economy would expand between 3 percent and 3.5 percent in 2012, an improvement over estimated 2011 growth. He said much of this year's activity would be fueled by businesses' replenishing inventory in anticipation of consumers again opening their wallets.

"It won't be a boom year, but it will be a good year," Kellner told the New York chapter of the Association for Corporate Growth, which encourages private investment in medium-sized companies.

Kellner acknowledged the potentially negative effects of continued political gridlock in Washington and the European debt crisis but said they would be offset by increased hiring, stable fuel prices and corporate leaders' optimism.

"Election years are usually good years for the economy," he said at Hofstra University, referring to the U.S. presidential contest. "Look for more jobs to be created and the housing market to bottom out."

Foreclosures, together with falling home prices and difficulty in obtaining credit, have stalled the housing market both nationally and locally. This, in turn, has dampened economic activity.

The primary culprit, Kellner said, was the reluctance of some buyers to act, believing home prices will fall further.

He added, "I would be prepared for an economy that surprises on the upside rather than the downside."

But Greg David, former top editor of Crain's New York Business magazine, said layoffs and fewer cash bonuses on Wall Street will dampen the regional economy, including Long Island. He said, "As the national economy accelerates, the drag of Wall Street means the regional economy stagnates."