JPMorgan Strategist Sees US Growth Into 2012 

Thursday's hat trick of rising economic activity, higher consumer sentiment, and a drop in jobless claims shows an improving U.S. economy that will be stronger in the fourth quarter and into next year, David Kelly told CNBC Thursday.

"I am encouraged by the increases in confidence," said the chief market strategist for JPMorgan Funds, as well as the rising economic indicators and the improved gross domestic product reported Thursday. "I think the economy will be stronger in the fourth quarter than it was in the third quarter."

If there is any risk, it's the "dysfunctional" American political system, as typified by the fight over the payroll taxholiday extension, Kelly said.

"The American people are disgusted by the games they’re playing, on both sides" in Congress, he said. "We have a very dysfunctional political system and that’s one of the biggest internal risks, probably the biggest internal risk to the U.S. economy."

He believes the tax holiday should be extended for a year, as the House Republicans want, rather than the two months the Democrat-led Senate approved before heading home for the holidays.

"But that's not the issue," he said. "The issue is how do you pay for it? Let's be honest about how to fund it" and be honest with the American people about it, he said.

He is even somewhat positive about Europe, saying the European Central Bank's offer of loans, while not a "crucial turning point," is "a help."

"What we’ve seen in the last two months is the U.S. economy is quite capable of growing despite the weakness in Europe. So if we have a 2012 in which Europe doesn’t solve its problems, but doesn’t have a huge financial meltdown, just kicks the can down the road, I think the U.S. economy will gather momentum," he said.

His picks for long-term investors, which he defines is as those holding stocks for five years or longer, are financials and technology stocks. While he didn't name specific companies, Kelly said that if the economy improves, financial companies will improve and the stocks are cheap right now.

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Disclosure information was not available for David Kelly or his company.