The commentary below is a summary of the second client call in the past six months about the Long Island economy. Led by William Spencer, Senior Wealth Advisor, the discussion featured John Traynor, People’s United Advisors Chief Investment Officer; John Mast, New York Commercial Market President, and Toni Badolato, a Commercial Regional Manager.
WE’RE EVEN MORE OPTIMISTIC THAN we were six months ago about the prospects for both the national and the Long Island economies. Nationally, we see the economy bolstered by three pillars: the injection of massive fiscal stimulus from the federal government and some of the states—on one day alone this year, the equivalent of 1% of our GDP was sent out in checks; the commitment by the Federal Reserve to keep interest rates low at least through 2023; and the increasing pace of COVID vaccinations. Currently, 50% of the adult population of the country has received at least one shot, including 65% of those over 65 in Suffolk County, and 69% in Nassau.
We hope and believe that those three pillars will come together nationally and regionally on Long Island. While we need to see higher confidence levels among consumers and in the small-business sector (confidence in many large businesses is back to pre-pandemic levels), we believe that trends bode well for the economy. That’s especially the case on Long Island.
Long Island Well-Positioned
Our positive outlook for the Island is based on several factors; we’d highlight three:
- A housing boom, the result of so many people working from home—a trend that’s likely to continue after the pandemic passes, though not as strongly. The median home price in Suffolk is at $470,000, and at $600,000 in Nassau, levels that are up substantially in just the past few years.
- An infrastructure highly attractive to professionals, including Stony Brook, Brookhaven, and Cold Spring Harbor, all nationally renowned science-research centers.
- A highly-educated population, including several areas of concentrated knowledge.
None of this means that New York or other major cities like Boston are declining in importance. The cities and their suburbs need one another. Large, iconic companies like Facebook and Amazon, realizing that fact, have bought or built large parcels of office space in, for example, both the City and Long Island.
“Knowledge Clusters”: Concentrated Intellectual Talent
With the national economy increasingly concentrated in the service sectors and reliant on brain power, cities such as New York, Boston, and San Francisco, with their exceptional educational, health, and high-tech institutions, have become talent-rich knowledge clusters. Long Island is also becoming such a cluster. The City and Long Island offer the human capital, financial capital, and company presence that appeal to bright people and promote their working together.
Since Long Island has the resources requisite for success, what’s happening here that’s exciting? We’d point to two exciting projects in the making. The Nassau Hub will convert 70 acres of underused land around the Coliseum into a multi-use center, including a 950,000-square-foot health-science and R&D facility, a large entertainment venue, and 500 units of housing. And the State has contracted with Equinor, a prominent Norwegian energy company, to build a large wind farm 15-18 miles off the Jones Beach coast. In fact, the offshore waters of the Northeast, together with the Pacific Northwest and the Great Plains, are one of the country’s best locations for harnessing clean wind energy. We believe that projects like the Hub and the Equinor wind farm will yield economic and environmental dividends for generations of Long Islanders.
Bullish on Equities, but Watchful
In light of our favorable economic scenario, we remain overweighted in stocks. We raised our allocation last year, and profited from it, as the Dow Jones Industrials soared from 22,000 to 34,000. After a runup like that, we’re somewhat more cautious, though we continue to see investment opportunities. Meanwhile, with interest rates staying low, this can be a great time for homeowners to refinance their mortgages and business owners to reinvest in their companies.
But the key for investors, as always, is approaching their portfolios holistically rather than segment-by-segment, and planning. For example, with all the stimulus payments and the bull stock market, some of our clients have found themselves sitting on cash they don’t need. For some of them, moving excess cash into other short-term investments may make sense. For all of our clients, this is a good time to consult with us about their short- and long-term goals; as always, we’ll help them balance return expectations with risk.
Synergistic Merger with M&T Coming Up
We’d also highlight the upcoming merger with M&T Bank, expected to close later this year. M&T shares with us a customer- and community-focused approach, and a locally-driven business model. We’re excited about the opportunities the merger will offer clients via an expanded suite of financial solutions and a broader company footprint. Meanwhile, our commitment to customized service targeted to meet the investment and banking needs of each of our clients one-on-one will not change.