• Cautious optimism continues to be the prevailing theme for capital markets.

• Corporate tax cuts combined with low unemployment and high consumer confidence suggest corporate earnings may live up to the lofty valuations seen in the stock markets.

• The Fed’s ability to accurately gauge labor market slack and inflation expectations will be key to future economic growth; monetary policy that is too aggressive could hinder growth in a hurry, but gradual rate hikes still appear to be the most likely course of action.

• Loan growth is still expected for the Sacramento region, albeit at a slower pace relative to 2017; financial institution net-interest-margin improvement will depend largely on how aggressive the aggregate deposit pricing response is to more Fed hikes.

• The SBR Financial Conditions Index shows 2017 was another strong year for Sacramento; positive trends are expected to continue into 2018.