Leading strategists Liz Ann Sonders, from Charles Schwab, and Jonathan Golub, RBC Capital Markets, were generally optimistic about the state of the U.S. economy and said there are no signs of impending recession at IMCA’s 2017 Investment Advisor Forum’s Strategist Panel. While they noted that the stock market has reacted positively to the election of President Donald Trump because of expectations of accelerated growth, they cautioned that these expectations may be somewhat overheated. Any change in tax policy and regulations—the sources of the anticipated growth—are likely to come more slowly and perhaps be more modest than the markets reflect.

“Growth could accelerate, but it’s silly to think it could get to 4 percent as Trump has promised, remarked Golub. “Growth at 2.6 percent, up from 1.6 percent last year is more plausible.”

“Also, the market was not factoring in the possible negative economic impacts of the president’s anti-trade and immigration policies, noted Sonders. “Taking the stance that trade is a win-lose proposition—that one country must lose if another wins, is misguided.”

Both panelists suggested that there is no question that the predominance of business executives among the president’s appointees has inspired business confidence, but the key to success may be whether the appointees’ business experience will translate into competence in government. After all, they reflected, the economy was showing significant signs of strength before the presidential election. Households have reduced their debt loads significantly, unemployment is down, the economy is producing jobs at a healthy pace, companies have not increased their debt loads, and average hourly earnings have risen. As a result, the panelists felt the Federal Reserve will probably continue to raise interest rates and the markets will be fine with that—particularly true in the first year of a rising rate cycle

Although a recession wasn’t seen as imminent by both panelists, Sonders suggested watching leading economic indicators, such as the slope of the yield curve, for signs of an impending slowdown and noted that there were no indicators “flashing red” at this time. Golub said he would look for inflection points, such as if the market starts reacting negatively to hikes in interest rates, as a sign of a recession on the horizon.

The biggest risk to their fairly optimistic view of the economy? Policy risk.

“The single most important thing is to maintain this incredibly successful world order we have set up since World War II,” concluded Golub. “Making the world a safer place matters more than anything else.”