The economy is on course to be as strong as we have seen in almost 50 years, and the challenge is to keep it that way, according to John Williams, 12th president and CEO of San Francisco’s 12th Federal Reserve District Bank.

Williams, who will leave his current post to become president of the Federal Reserve Bank in New York starting June 18, spoke before 170 people at a luncheon sponsored by the nonpartisan World Affairs Council of Sonoma County at the Flamingo Hotel.

The expansion that started nine years ago is still underway, he said, buoyed by near record-level stock market performance, low unemployment, robust job growth and other key economic indicators heading in the right direction. However, Williams said the numbers of those in labor force and productivity gains are not increasing at the same pace as in the past.

Answering a question about the possibility of a trade war with China over tariffs, he said, “So far the things I’ve seen happening do not change my outlook and don’t add up to a huge effect on the economy.”

“There is a risk that if the situation gets out of hand, it could be disruptive and costly for consumers and possibly lead to higher inflation,” Williams continued.

Williams described the overall economic outlook as “very positive,” while also saying that the current pace of growth is “above trend,” the level of growth that can be sustained over time.

“Growth above trend doesn’t necessarily pose a risk right now, but it’s one of the factors I’m assessing when thinking about how to best support economic growth over the medium term,” he said. “Trend growth has two main drivers — labor force growth and productivity growth.”

He said trend growth today appears to be considerably slower than at other times in our lifetimes. The decline in labor force growth has been impacted by two factors: baby boomers retiring in droves, and the fact that the U.S. fertility rate has declined.

The U.S. unemployment rate was 4.1 percent Friday. The last time national unemployment dropped this low was in 2000. He expects wage growth to pick up as talent becomes increasingly scarce and competition forces firms to bid for workers.

Productivity is averaging about 1 percent a year, compared to the 1990s and early 2000s average of 2 percent to 3 percent.

“We’re in the third — in fact, very soon to be the second — longest economic expansion in U.S. history,” Williams said. “This expansion is taking place nationwide and across the full range of sectors with consumer spending, manufacturing activity and construction all showing robust numbers as part of a global trend of stronger-than-expected growth … Looking ahead, I expect U.S. growth to average over 2.5 percent this year and next.”

He doesn’t see any signs that the economy has fundamentally shifted gears.

As the nation’s central bank, the Federal Reserve System formulates monetary policy, serves as a bank regulator, administers certain protection laws and is fiscal agent for the U.S. government.