The economy is definitely making a transition. I think 1998 will be viewed as the year of soft landing when the economy went from a nearly 4 percent growth rate in the prior year, to just over 2 percent this year.

The U.S. economy is performing so admirably right now, it is hard to believe how good it is. We have strong growth, declining inflation, strong profits, rising real wages. All of these things are happening at the same time and there is no sign that any of this is about to end.

We think the Fed will continue cutting rates, although less aggressively. We are expecting another [quarter-point] cut at the December meeting and another cut in January, with the fed funds rate ending up at 1.5 percent.

This is an area that has performed better than the national economy for quite a while now. We have one of the highest per capita income numbers. We have some of the lowest unemployment numbers. People have jobs and are basically happy and are able to buy things. If they have a lot of money they need banking services.

Rising oil prices are the biggest risk to what is otherwise shaping up as a robust recovery.

And the signs since the fourth quarter suggest growth picking up in the first quarter more strongly than most people had anticipated. So I would say the recovery is here.