Mario Gabelli says that the fundamentals of the economy indicate the U.S. will avoid recession, but says that psychology of consumers and businesses is the “wild card” in determining just what happens.

“The wild card is how people — and businesses — react to getting zero on their Treasury bills, to the numbers they hear on inflation and to all the news out there that scares them about what is happening in Europe,” Gabelli said at the Schwab IMPACT Conference, MarketWatch’s Chuck Jaffe reports. “Even though Greece has about the same economic impact as Maryland, there’s fallout and if people are scared and keep being pounded with headlines and experts who make them nervous and steal their confidence, that will get them to ignore the underlying numbers. That will make it harder to complete any recovery.”

Gabelli said he’s keying on stocks that have little or no debt, solid balance sheets, and which make products that are consumed. Another area he thinks is offering value: alternative and renewable energy stocks.

Gabelli also says he thinks it will be another year before the housing market stabilizes; then it can start a mild recovery, he says, according to Jaffe.