US gross domestic product could grow at an annual rate of as much as 3 percent next year as consumers and businesses start to regain confidence, Peter Cardillo, chief market economist from Avalon Partners, told CNBC Tuesday.
"It's all a question of confidence and that confidence is coming back. It's not only coming back among the consumers, but it's also coming back among the businesses," Cardillo said.
"We're probably headed for growth somewhere between 2-3/4 and 3 percent here in the States and in terms of the global economy we're probably looking at growth close to 4 percent," he said.
- Watch the full interview with Peter Cardillo above.
He thinks the economic growth will be uninterrupted for several years to come.
The economy could turn around its growing unemployment problem and start gaining jobs as early as December 2009, Cardillo said. The US unemployment rate rose above 10 percent for the first time in 27 years in 2009.
"There's a good possibility that we could see jobs actually show an uptick for December by about 5,000-6,000 jobs, which is obviously very small but certainly a reversal," he said.
The US housing market remains under pressure, however, because banks are being restrictive with lending, according to Cardillo.
Cardillo also said he thinks that the Treasury will begin to withdraw a lot of the excess stimulus liquidity currently in the system, but the risk of deflation has largely disappeared.
"I don't think we run the risk of deflation in 2010, if anything we might run the risk of a nasty dose of inflation in the later part of the year," he said.
The Federal Reserve has introduced a new tool to withdraw liquidity from the system called the Term Deposit Facility. The program would let financial institutions earn interest on longer-term loans to the central bank.
