Dr. Peter Morici:: On Tuesday, the US Commerce Department will report revised data for third quarter GDP (gross domestic product).

Inventory investment may contribute less to growth, and the trade deficit will continue to swell, taxing demand for U.S.-made products and GDP growth. Cash for clunkers will not assist auto sales, and non-auto retail sales are recovering only modestly from the recession. Although the new home buyers’ tax credit has been extended and expanded, preliminary data do not indicate another sharp increase in residential construction activity.

Stimulus spending should contribute more to growth in the fourth quarter of 2009 and 2010. However, once the stimulus money is spent, a second dip in GDP is likely if exports don’t take off or something is not done to significantly curb imports of oil and consumer goods from China.

Overall, economists expect GDP growth in the range of 2.9 percent in 2010, and that is hardly anything to cheer about. Coming out of a deep recession, a much larger jump in GDP should be expected.

Growth less than three percent is not enough to keep unemployment from rising further. My estimates indicate the jobless could reach 11 percent in the 2010.

Health care reform will likely raise private sector costs another $140 billion per year or one percent of GDP—this is in addition to the taxes levied to pay for federal subsidies to low-income individuals purchasing health coverage.

Cap and Trade to curb CO₂ emissions would further the raise the cost of doing business in the United States.

In 2010, pending changes in health care mandates and pending Cap and Trade legislation will weigh on business expansion decisions, reduce private investment and send more jobs to China and other Asian locations.

Once the effects of the $789 billion stimulus package have passed, the US private sector will likely have many fewer jobs than in 1999. 2010 may be a decent year, but the fundamentals are building for a disappointing 2011.

Without public policies more supportive of private sector jobs creation and exchange rate reform, the US economy is headed for a period of growth less than three percent and chronic double digit unemployment.

Paradoxically, stocks should continue to rally through the New Year and into 2010. Modest growth at home and robust opportunities in Asia are enough to boost profits for large US multinationals, and those profits plus low interest rates and abundance of cash in the hands of institutional investors will power stocks upward in the New Year.