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Over the last month, our optimistic outlook for 2018 has consolidated, with growth expected to exceed 3 percent during the second half of the year. Measures of consumer and business confidence have strengthened. While equity markets remain volatile, they have returned to the levels of the beginning of the year. Uncertainty around trade policy still could cause businesses to delay investments. Weakening momentum in Europe and emerging markets could also dampen demand for US goods. But for now, internal US dynamics clearly trump external ones. Most notably, the labor market continues to create jobs at a rapid clip, helping to drive the unemployment rate down to 3.8 percent, the lowest rate since the 1960s. A stronger labor market also boosts inflation risk, possibly forcing the Federal Reserve to raise rates three more times in 2018.