Although 2010 almost certainly will be kinder to investors, many of the old challenges will carry over into the New Year. Joblessness will continue to weigh on corporate profits, though its effects are beginning to relent.

Consumers generate about 70 percent of the nation’s gross domestic product (GDP); full employment is critical to sustaining demand and economic growth. As it stands, some 15 million reluctant consumers lack a steady and dependable income, setting up a negative feedback loop whereby reduced spending translates into fewer jobs, which, in turn, leads to less spending.

But there are signs of improvement. Both consumer spending and confidence ticked up through year-end even though the level of outstanding consumer credit fell. And constrained credit availability applied primarily to credit card balances and other revolving debts; levels of non-revolving debt, such as home and car loans, continues to rise in fits and starts.

This green shoot suggests that those who are employed and aren’t saddled with debt are once again opening their wallets for big-ticket items, setting the table for an eventual improvement in the jobs situation. Nevertheless, several months likely will pass before the economy adds jobs.

And both residential and commercial real estate are major concerns going forward.

About $70 billion worth of mortgages will reset in 2010, with a major spike expected in the back half of the year–the time when the Federal Reserve would be most likely to raise interest rates. Such a development would place further pressure on already stretched households and won’t stem the tide of foreclosures.

Rising defaults in commercial real estate will stress banks’ balance sheets further. Financial outfits themselves are choosing to walk away from their obligations; Morgan Stanley (NYSE: MS) recently announced it would abandon five of its office towers in San Francisco.

That being said, the real dangers appear to have passed. Forecasts for 2010 earnings remain positive, and most areas of the economy are showing signs of improvement. Analysts estimate that the S&P 500 will grow full-year earnings per share from the low USD60s registered in 2008 to about USD78 this year.

A consensus has emerged that the US economy will enjoy moderate growth in 2010, and analysts generally remain sanguine on the prospects for US equity markets. Most forecasters expect US

GDP to grow roughly 2.5 percent, powered by inventory restocking, improvements in the housing market, and an uptick in exports due to a weaker dollar. This economic forecast ranks the US as the 14th fastest growing economy; analysts expect much of Asia and parts of South America to lead the way in 2010.

I agree with analysts’ modest optimism and expect improved consumer spending on discretionary goods, though I don’t anticipate a huge pick-up in demand for luxury items.

Easy credit bolstered sales of aspirational brands to unsustainable levels over the past few years, a reality underlined by the shakeout that’s occurred in the sector’s earnings; for example, Coach (NYSE: COH) and other iconic names have endured several quarters of declining same-store sales. Although sales picked up slightly at the end of 2009, the days that these brands and retailers enjoyed 5-percent annual sales growth have passed.

Given these challenges, I favor funds that focus on quality growth companies with multinational exposure–for example, Jensen J (JENSX) and Aston/Montag & Caldwell Growth N (MCGFX). Of course, the picture is vastly different overseas, particularly in Asia.

Asian markets performed exceptionally well last year, and our top performing pick in 2009 was Matthews China (MCHFX). Heavily weighted towards the consumer, the fund’s holdings benefited from China’s efforts to boost domestic demand and lower its dependence on exports. Continued stimulus spending on infrastructure development also provided a welcome boost.

These trends should remain in play in 2010 and should enable the country to grow GDP by at least 9 percent. Needless to say, Matthews China is an attractive play for the coming year.

On the fixed-income side, now is the time to look a bit lower down the credit-quality ladder. Fidelity Capital & Income (FAGIX) sports a solid ‘B’ average credit quality, but manager Mark Notkin has demonstrated an admirable knack for managing risk, cutting losers quickly and keeping sufficient cash on hand to take advantage of opportunities. I expect many of Notkin’s adventurous picks to fare well over the next year.

Commodities should also flourish as the global economy recovers and production ramps up to meet demand; broad exposure to this trend is a must for investors.

Copper prices, which rise and fall with the global economy, are on the rise; Chinese imports have rebounded and both Indian and US demand should increase over the coming year. Prices on corn and other agricultural commodities are also ticking up and could be poised for a rally.

The iPath Dow Jones-UBS Commodity Index Total Return ETN (NYSE: DJP), is an excellent way to gain broad exposure to all corners of the market. This exchange-traded note currently allocates 25 percent of its assets to industrial metals, 25 percent to agricultural commodities, 11.8 percent to precious metals, 5 percent to livestock and 32 percent to energy.

This should be an excellent year for investors, particularly those whose portfolios remain well diversified. But just because the markets are up doesn’t mean that disciplined long-term investors should abandon selectivity.

As always, only trust your money to well-qualified managers running low-cost funds and verify, verify, verify. The glossier the sales brochure, the more questions you should ask.