Blackstone Advisory Services Vice Chairman Byron R. Wien, who has made annual predictions for U.S. markets and the economy at the start of the year for the past quarter century, believes there will be a number of welcome surprises in 2010—not least of which will be GDP growth surpassing forecasts of 5%.

In addition, Wien sees unemployment falling below 9%, and operating earnings of companies in the Standard & Poor’s 500 Index topping $80.

However, as the Federal Reserve begins to see real improvement in the economy in the second half of the year, Wien says, it will raise the Fed funds rate above the near-zero level to 2%. And, with the U.S. Treasury borrowing at record levels and foreign central banks reluctant to keep buying notes and bonds, the 10-year Treasury yield will rise above 5.5%. Demand for Treasuries will fall and, commensurately, banks will be more willing to lend to corporations and individuals, Wien says.

The stock market will continue on an extremely volatile path, declining after the S&P 500 rallies to 1300 in the first half of the year, he says. The dollar will regain some of its lost value in 2010, although longer-term prospects are uncertain.

Finally, Wien believes financial services reform, like healthcare, will be watered down, which markets will likely welcome, sending financial services stocks up to new highs.

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