Ever since American stocks started to sizzle in 2013, clients have bombarded financial advisors with questions about why they are diversified in international equities. Four years later, a new president with a nationalist agenda is engaged in an unprecedented frenzy to attempt to drive domestic economic expansion in what conventional wisdom holds is a 2% GDP growth world.

One believer that the U.S. economy can break out of secular stagnation decisively is Phil Orlando, chief equity strategist of Federated Investors. If even part of his scenario materializes, Orlando thinks the Standard & Poor’s 500 Index could reach 3,000 by 2020.

Central to his thesis is that a combination of lower corporate and personal taxes, repatriation of trillions in corporate cash, deregulation, higher defense and infrastructure spending and fully expensed depreciation can unleash a new burst of productivity growth. His prediction hinges on Congress passing “something remotely resembling” the broad agenda President Trump has outlined.

“What we are looking at is structural reform. Three percent GDP growth is doable,” Orlando says. “If we are wrong, we are wrong to the upside.”

Virtually all confidence and sentiment indicators have gone vertical since the November election. In February, the Philly Fed index stood at a 30-year high. “There is an 86% correlation between confidence and GDP growth,” Orlando notes.

Maybe so, but both the equity market and economic expansion are celebrating their eight-year anniversaries. If business activity picks up, couldn’t an increase in inflation and interest rates eventually impact growth and price-to-earnings multiples?

It doesn’t have to. Orlando postulates that the S&P 500’s earnings could reach $150 a share by 2020 and its P/E ratio could climb from 18 to 20. “It is not until Treasury yields get to 5% that multiples start to contract,” Orlando says, adding that history shows they typically expand on their way to that mark. To those who fear pro-growth policies mean higher budget deficits, he says a 1% GDP increase would translate into $300 billion more in federal tax receipts.

At first glance, Orlando’s call of a 3,000 S&P 500 in 2020 looks easier to reach than a sustainable 3% GDP growth rate. Some other equity strategists’ forecasts have a sunnier outlook for stocks by a country mile. Raymond James’s Jeffrey Saut, another smart observer who, like Orlando, has been spot on so far in this current bull market, has called for a 5,400 S&P by 2025.

GDP growth has only two components—population and productivity—and Orlando acknowledges the U.S. population is only rising at a 0.5% clip, the lowest in history, while demographics tilt toward aging workers and retirees. Productivity could pick up significantly, but getting to 2.5% seems a stretch.

Trump’s desire to drive job creation to 25 million over the next 10 years translates into a pedestrian 208,000 jobs a month and should be easily achievable. That’s about what the economy did under Obama’s second term, which delivered only 2.1% growth and was hardly a barn burner.

To sustain a 3% GDP rate, the nation needs many of the 23 million Americans aged 24 to 55 who aren’t looking for work to re-enter the labor force. But “we also need more immigrants,” Orlando argues. Eight of the 11 million undocumented workers are “gainfully employed” in industries where they are needed, like agriculture, hospitality, childcare, eldercare and construction.
For all President Trump’s tough talk on immigration, he has displayed a willingness to make 180 degree turns in midsentence. Ever the optimist, Orlando thinks a consolidated Congress could finally pass immigration reform.

Cruel as it is to say, chambermaids and nannies aren’t going to fuel productivity growth. New innovations like burger-flipping robots aren’t going to drive human employment either.

It’s another class of immigrants who might flip productivity figures. Just as U.S. manufacturers have 300,000 jobs they can’t fill, there are 500,000 high-paying technology jobs that remain open. Three-quarters of graduate students in America studying science, technology, engineering and mathematics are foreign-born.

Orlando suggests “stapling a green card to their diplomas,” which high-tech companies would love to do. The people who start the next Microsofts and Amazons may well be American college dropouts, but the people who build those organizations are likely to have advanced science degrees.

How realistic is all of this? Orlando concedes he doesn’t expect everything to happen. He also worries that Trump is making “the same mistake” as his predecessor, putting health care first and squandering a lot of political capital on an intractable, intensely emotional issue. Others fear that if Republicans squabble too long over replacing Obamacare, tax reform could be jeopardized.

Were the U.S. economy to enjoy a 3% run rate, it could lift many sectors and individuals that the new normal left behind. “Two percent growth has been both a blessing and a curse,” says Ben Mandel, global strategist at J.P. Morgan Asset Management. “The distribution of growth in this economic cycle has been highly uneven.”

Since mid-2016, the composition of global growth has been more uniform, with pleasant surprises coming from many places, even Europe. The surprises have been “all positive and evenly distributed,” Mandel notes. While he views the U.S. as a 2% growth economy, Europe is a 1% grower that is now expanding at 1.5% to 2%. That latter rate probably is temporary.

Trump’s agenda provides a test case for animal spirits. Mandel thinks that the U.S. will recover from several years of zombie productivity, but to sustain 3% growth it will require a radical increase in worker efficiency, signs of which haven’t surfaced. Still, J.P. Morgan continues to advocate overweighting American equities despite their high valuations.

No one is certain about what will come out of Washington, but the initial rollout of the Republican health-care plan was underwhelming. “Tax reform will have winners and losers; tax cuts will have broader benefits,” says Brian Levitt, senior investment strategist at OppenheimerFunds.

The performance of various asset class returns since January 1 reveals that the market is reassessing its late-2016 reaction to the election, when old economy equities like banks and industrials bolted out of the doldrums. This year, however, large-cap, growth stocks like technology companies once again are beating their small-cap and value counterparts.

Levitt believes the latter two groups “need something” like good fiscal policy to take them out of their funk. The sexier growth companies that have been winners since 2009 don’t need a lift from Washington to keep expanding. They also don’t create enough jobs to move the employment needle.

Business and consumer sentiment is ebullient but “we need to see hard data,” Levitt continues. “The bond market is telling us it’s still a 2% economy, and it may be lower in the first quarter. If the Fed raises rates without deficit spending, it could hurt.”

Most market observers agree strong links exists between economic growth and monetary and fiscal policy. More controversial, however, is the connection between policy and equity performance. Some view that as more tenuous and think what happens in the private sector is more important.

Politics aside, most American adults view President Reagan and Clinton as superior economic stewards to Presidents George W. Bush and Obama based on their real experiences. GDP growth exceeded 3.5% under both Reagan and Clinton while failing to average 1.9% under the latter two presidents.

But conditions are totally different today. Thirty years ago, America possessed a younger labor force whose ranks were swelled by the entry of women and baby boomers. Go back further and things were even better—in the 1960s GDP growth exceeded 5% for most of the decade.

Breakthroughs in the private sector often dwarf what happens in Washington. The advent of personal computers in the 1980s and the Internet in the 1990s spawned an information economy that provided much of the fuel for that historic bull market.

Contrast that to what has so far been viewed as a dismal century. In 2001, Bush was forced to deal with more than 1 million job losses in the months immediately following 9/11, not to mention the accompanying damage to consumer confidence. Seven years later, he and Obama transitioned presidencies during the worst financial crisis in 80 years, one that cost America 9 million jobs and left severe psychological scars still present today.

Even if pro-growth policies coming out of Washington don’t get GDP to a sustained 3% rate, they could push a recession further out on the horizon and spur further gains in equities, according to Anwiti Bahuguna, a portfolio manager on Columbia Threadneedle’s asset allocation team. She thinks a combination of tax cuts, increased infrastructure and defense spending and less regulation for small business could bump up growth in 2018 that continues into 2019.

“Getting to 2.5% or 3% would be a wonderful place to be,” Bahuguna says. Before the election, she and her colleagues thought a recession might arrive before the decade was over. For the next five years, Columbia Threadneedle expects equities to grow 8% nominally, with 2.25% of that coming from inflation.

Ben Inker, chief of asset allocation of GMO, acknowledges that his firm ignores political forecasts when estimating future returns. GMO’s seven-year forecasts, widely followed by many advisors, call for U.S. large-cap stocks to return -3.4% in real terms over the next seven years, while domestic small-caps will generate -2.7% over the same period. Of the 10 asset classes, GMO follows only emerging market stocks and bonds are expected to produce positive real returns of 4.1% and 1.3%, respectively, in their own currencies.

When it comes to U.S. markets, Inker says “you have to believe that profit margins and price-to-earnings multiples have moved to a permanently higher level.” It’s possible, but the safer assumption is that they will revert closer to their means.

Inker warns the surge of populism sweeping the world could become a problem and make GMO’s forecast for emerging markets too positive. “The retreat from globalization isn’t good for anyone, but it could be worse for most emerging markets,” he says.

In the current climate, a trade war remains the biggest risk that could “blow a hole” in people’s portfolios. “You could readily imagine a slowing economy with rising inflation,” Inker argues. “No one is prepared [for that] and no assets would do well.”

So what’s a global asset allocator to do? Directionally, it’s clear the global economy is entering a synchronized expansion, but no one knows what its duration will be. Modern portfolio theory calls for advisors to rebalance some portion of clients’ assets out of U.S. equities and diversify. Many are doing exactly that.

Europe faces four major elections this year that will test the depth of discontent and, conceivably, the viability of the European Union. If people were so delighted with the state of affairs they wouldn’t be voting for populist and nationalist politicians appealing to various resentments all over the world. But twice in the last year, events like Brexit and the election of Trump confounded conventional wisdom, as imagined catastrophes produced powerful market rallies.

At present, Europe is further behind in the economic cycle than America, where the labor market is tightening. Rajiv Jain of GQG Partners notes that over the last three years Europe has added “approximately the same number of jobs as the U.S.” For Europe, that’s progress, even if its population is 50% larger than ours.

When it comes to equity valuations, Jain believes one can find more attractive pockets of value in Europe and emerging markets. Banks and other cyclical businesses are finally participating in the eight-year-old market advance, and he sees that continuing. Yesterday’s winners—multinational consumer companies, bond proxies like Nestlé and Colgate-Palmolive—could see money looking for businesses more leveraged to the global economy.

Ultimately, another kind of investment, capital spending, will influence where the economy and financial markets are headed. The parade of CEOs visiting the White House and pledging to build new plans in America isn’t without skeptics who see little more than PR stunts. Some projects, like Intel’s facility in Arizona, have been under construction since 2012.

Dambisa Moyo, a global consultant who sits on the board of directors of Chevron, Barclays and Barrick Goldcorp., sees some positive signs like rising wages, but wonders if economists have run out of tools to address structural problems, like global debt, demographics, resource scarcity, income inequality, automation and a growing jobless underclass.

She believes all the positive factors from a pro-growth agenda are priced into stocks and wonders if markets are considering what the negative effects of three Fed rate hikes, a border adjustment tax and an even stronger dollar might be. From her perch as a corporate director, capital allocation decisions have been heavily skewed toward share repurchases and dividend increases. She questions whether companies are willing to commit capital to investments besides financial engineering as the market expects.

If corporate America follows through and allocates capital to projects that drive productivity, the animal spirits unleashed in recent months may eventually appear to be the light at the end os secular stagnation’s dark tunnel. But there is precious little room for disappointment.

Evan Simonoff is editor-in chief and editorial director at Financial Advisor magazine.