John Howard famously declared during his 2004 re-election campaign that interest rates would always be lower under a Coalition government.

That's been a truism for several years now, with the official cash rate at a record low of 1.5 per cent.

But if the betting is correct about our interest rate trajectory, it may well be that interest rates under the Morrison Government will forever hold the record for the lowest of all time.

That would be a neat historical bookend given the highest was 21.4 per cent, which occurred in April 1982 during the Fraser government when Mr Howard was treasurer.

No-one equates low interest rates with superior economic management any longer. In fact, it's debatable just how much influence governments have over rates.

Given its habit of shifting in 0.25 percentage point increments, when the Reserve Bank lowers rates tomorrow afternoon, it will be firing off one of the last six shots remaining in the chamber.

Market economists are falling over themselves guessing how many are to come. The consensus is two cuts, one tomorrow, the next in August. But the outliers are predicting as many as four in the next 12 months.

That points to an exceptionally weak economy, susceptible to a growing list of potential international shocks; a message starkly at odds with that presented at the budget and the election.

Just two months ago, we were promised a decade of federal budget surpluses based upon a strong and recovering economy.

When a housing slump collides with rising unemployment

That's the problem with booms. They tend to unwind, occasionally in spectacular fashion, especially when they've been supercharged with debt.

Super-cycle payback — low wages and record debt. ( Supplied )

That's where we find ourselves; hocked to the eyeballs with no obvious way out. Wages growth has slumped and savings have depleted.

More concerning, the housing boom — where most of that debt has been deployed — is but a distant memory. It has been in reverse for four years in West Australia and for more than 18 months on the east coast.

That's leaving a growing number of owners under water, owing more than their house is worth.

If it's temporary, and you can keep paying the mortgage, that's not a problem. But an extended price decline hits a growing number of homeowners and if the economy sours and firms start laying off indebted workers, the banks and the financial system take a hit.

In the west and the Northern Territory, almost 15 per cent of all mortgages are in negative equity. So, when the unemployment rate ticked higher last month, the Reserve Bank was left with no alternative; rates had to be cut and lending restrictions loosened.

With the ALP's defeat, two threats to property values — easing property tax concessions around negative gearing and capital gains — were removed. Add in the first home buyer government guarantee and that's a five-point housing market stimulus plan.

That immediately changed housing market sentiment. But the spruikers predicting another property boom may have some time to wait. It's more likely the market bottom will be reached sooner and not be quite so severe. But prices still have some way to fall.

Why the economy is slowing

No-one is mentioning the 'R word' quite yet. But the run of bleak news on our economy has been unrelenting of late, on almost every key measure. In fact, it's extraordinary no-one made much of a fuss about it during the election.

Inflation came in at zero for the March quarter, wages growth is anaemic, retail sales are poor, car sales have plummeted and last Friday, credit growth was weaker than even the pessimists were forecasting.

That followed sluggish business investment data along with a sharper than expected fall in building approvals. And despite all the recent hype, housing prices continue to slide.

On Wednesday, we'll be presented with the March quarter GDP numbers. This time last year they were strong. But in the second half of last year, the economy suddenly weakened. There's every indication that trend continued in the first quarter of this year with annual growth expected to come in at just 1.6 per cent.

Life in the slow lane. ( Supplied )

There's just one part of the economy that is doing well. And that's exports. More specifically, our iron ore exports have been forging ahead.

Not only have we been shipping vast quantities to China, we've been raking in vast profits. Iron ore prices have soared as China has pumped in stimulus at the same time supplies from Brazil have been disrupted by catastrophic dam failures with tragic consequences.

That export performance may lift real GDP and nominal GDP (which includes value). Unfortunately, given our mining industry is dominated by foreign owners, most of that cash ultimately flows out of the country.

Australia's iron ore exports have been one of the few high points of the economy. ( Reuters: David Gray )

What if the rate cuts don't work?

When the Reserve Bank cuts rates, it has more than just home owners in mind. The main aim is to force the Australian dollar lower. That helps boost our export income and makes our local industries more competitive.

Unfortunately, according to investment bank UBS, our temporary iron ore export boom could prevent a dramatic fall in the currency, which means the RBA would be firing off one round of its precious ammunition for little or no impact.

That's why Reserve Bank governor Philip Lowe has called on federal and state governments to help stimulate the economy.

"These include further monetary easing, additional fiscal support including through spending on infrastructure," he told a group of economists in Brisbane a fortnight ago.

"Relying on just one type of policy has limitations."

That's a big admission from a central banker; that it no longer has enough conventional firepower and it is in need of old-style government spending. It's a realisation that's dawned a little too late on many of the world's biggest monetary authorities.

The problem is, state governments, particularly in NSW and Victoria, have coasted along on the back of a property boom that now has turned to bust. The stamp duty rivers of gold no longer are flowing, meaning the Federal Government will most likely have to step up. And that will punch a massive hole in the budget.

Even so, should everything turn pear shaped, the RBA is prepared to delve into the murky world of unconventional monetary warfare.

Late last year, just as the first signs of our slowdown became apparent, RBA deputy governor Guy Debelle let slip the bank could engage in quantitative easing, a form of money printing employed by the US, Japan and Europe in the aftermath of the global financial crisis.

Our weakening economy couldn't have come at a worse time. An increasingly aggressive America is upping the ante with a hugely indebted and slowing China over trade, our major trading partner. Global bond traders are pricing in a global recession.

What a time to win an election.