On the growth-engine front, there's the prospect of a synchronized pickup in economic momentum globally. “While the US is a relatively self-sufficient economy, with exports accounting for just 12% of GDP, there's no doubt that we grow

faster when we have stronger trading partners,” Nelson writes in an outlook report subtitled New Life for An Aging Economic Expansion? “Strong global growth will provide more demand for US-produced goods and services.”

There's also the impact of the much-vaunted tax reform measure passed by Congress and signed into law by President Trump late last month. “The primary stimulus will come from the unfunded tax cuts (that is, without offsetting spending cuts), variously estimated to total between $0.5 and $1.4 trillion once the effects of induced economic impacts of the $1.5 trillion tax cut are considered, with most independent estimates near the upper end of the range,” Nelson writes. “In addition, the business sector is poised for faster growth from lower tax rates and more favorable treatment of investment, among other key benefits.” However, he notes that “benefits to households appear to be much more limited… with many taxpayers facing tax hikes, especially in wealthier 'blue' states.”

Finally, there's what Nelson terms “exuberant business confidence,” due only in part to the just-enacted tax reform. The Trump administration is also relaxing a broad range of regulations, and the growing global economy is supporting rising offshore demand for US-made products.

“Given these factors, it's not surprising that business investment in capital goods and structures has been surging, on pace to grow more than 4% this year after declining modestly in 2016,” writes Nelson. “Together with productivity gains and new hires, the investment is paying off in rising industrial output, expected to grow by close to 2% this year, after falling in both 2015 and 2016.”

Yet Nelson notes that the economy also faces “some decided headwinds” that may limit the positive impacts of the growth factors. “Notably, the tax bill is likely to prompt the Fed to more rapidly shift from dovish (pro-growth) to hawkish (anti-inflation) policies that raise interest rates and slow wage growth,” he writes.

Meanwhile, the possibility of trade wars with the country's trading partners in response to more protectionist US policies is “perhaps the greatest near-term risk for the economy,” writes Nelson. “The labor market also faces increasing labor shortages that are being exacerbated in key sectors by curbs on immigration.” That being said, he adds, “Overall, near-term risks seem slanted to the upside.”