Before presenting his 2017 economic outlook at a luncheon for investors Tuesday at the Sarasota Yacht Club, economist Douglas Porter wanted to hear what his audience thought.

Porter, the chief economist and managing director for BMO Financial Group, asked for a show of hands from those who were optimistic, then from those who were cautiously optimistic and, finally, from those were pessimistic. The response was both consistent with what Douglas said he has noted recently from similar groups, and different from what he has seen in recent years. Around one-third of the audience said they were optimistic and almost everyone else raised their hands as cautiously so. Only a scattering of hands in the large room came up for pessimistic.

"I'm seeing a lot more optimists," Porter said, adding that President Donald Trump's "honeymoon" with investors appears far from over.

Porter said in past years at such gatherings 90 percent of the audience was in the middle, cautiously optimistic, with the rest split.

The takeaway, he said, is that even with equity markets at record levels, investors sense the U.S. economy may still be on the upswing. Over the next hour, Porter laid out a detailed analysis affirming reasons for such optimism, but also noting threats that could put the economy and the markets in a tailspin.

Porter cited a number of encouraging factors, including consumer confidence now at its highest level since 2001. Another boost, he said, was getting through the presidential campaign. Because there were such stark differences between the major candidates, Porter said that business leaders "sat on their hands" much of last year, waiting to see which course the nation would take. Business investment tumbled. Now, business leaders have a clearer view of what is coming from Washington, D.C., and for the most part they like what they see.

Other explanations for the post-election surge in stock prices  is the hope that Trump and a Republican-controlled Congress will cut regulations, reform the tax code and approve a major stimulus program for infrastructure. Little to none of that has yet to happen, and Porter admitted he was astonished how much the markets have already baked in the expectations that the changes will come.

But what has happened is encouraging, he said. Unemployment continues to fall, while wages and home prices are steadily rising, as are corporate earnings. Porter said that even with the Federal Reserve expected to raise interest rates two or three more times in coming months, BMO is projecting that the 10-year U.S. treasury note will not rise much above 3 percent by the end of 2018.

While it does not register with most consumers, inflation has remained tame, and should continue so, he said, pointing out that food prices actually declined significantly last year.

So, why worry? A couple of reasons, Porter said. One is that Trump continues "to relentlessly beat the drum for protectionism." Porter said he does not understand why the president has taken on Mexico, where our trade deficit is around $60 billion, when the real elephant is China, where the imbalance last year was a staggering $347 billion. Getting into a trade war with China could sink the global economy.

Another headwind is the federal debt, which has reached nearly $20 trillion. After declining for four straight years, the federal deficit surged again last year, to $587 billion. Porter said the basic federal budget starts half a trillion dollars in the red, before any stimulus spending is included. Trump seems less concerned than fiscal conservatives in his own party about adding to that debt, Porter said.

Given all these factors -- not to mention the unpredictability of the new president himself -- where should investors put their money? One audience member asked about pulling out of the market and "going to cash." Porter said BMO does not make forecasts on how much the stock market will rise or fall in a year, but he thinks the bull market still has room to run, with the economy continuing to improve this year and next.

"I'm cautiously optimistic," he said.