At first blush, on Federal Treasury's estimates, whoever wins the May 18 election is walking into a fairly agreeable economic climate.

Key points: Treasury's forecast of GDP growth accelerating to 3pc by 2021 and unemployment at 5pc look optimistic

Treasury's forecast of GDP growth accelerating to 3pc by 2021 and unemployment at 5pc look optimistic Key domestic issues include weak consumer sentiment from weak wages, falling savings and rising household debt

Key domestic issues include weak consumer sentiment from weak wages, falling savings and rising household debt Global economy looks shaky with IMF downgrading advance economy growth to just 1.8pc this year and China dealing with a massive debt problem

Economic growth is expected to accelerate smoothly from the spluttering 2.3 per of last year to 3 per cent by 2021 and beyond.

The unemployment rate will stay steady at 5 per cent for what appears to be perpetuity, or 4 years at least.

Workers who have seen their pay packets grow at historically low levels, barely above 2 per cent last year, won't be feeling the pinch so badly from 2021 when wage growth will pick up to a more robust, pre-GFC level of around 3.5 per cent.

And the budget is promised to be in surplus for as far as Treasury can see into the future. It's almost the economic sunshine Australia was basking in before the global financial crisis blew the place to bits.

So what could go wrong?

In short, plenty. It may be the sort of election where you'd be better off looking on from the sidelines afterwards, chirping "I told you so."

Global slowdown

There are the obvious big global worries where Australia would just be collateral damage if things fall apart.

World economic slowdown: There are signs of green shoots, but overall things are still fragile and central banks are are turning dovish-again

World economic slowdown: There are signs of green shoots, but overall things are still fragile and central banks are are turning dovish-again China slowdown: The world's second-biggest economy, and Australia's most important commodity buyer, continues the delicate balancing act of engineering a soft landing on an explosive pile of debt

China slowdown: The world's second-biggest economy, and Australia's most important commodity buyer, continues the delicate balancing act of engineering a soft landing on an explosive pile of debt US/China trade relations: Edging away from red alert, but a sudden deterioration can't be discounted.

The International Monetary Fund has just downgraded its global growth forecast to the lowest level since the global financial crisis.

Advanced economies are forecast to grow at just 1.8 per cent this year, a sharp pull-back from the already pedestrian 2.2 per cent growth last year.

The fact long-term interest rates have lower yields than short-term rates doesn't bode well for the global outlook.

"In the US, in particular, the inversion of the yield curve has polarised markets, whether it signals a recession is one thing, it certainly signals a deceleration of growth," IFM Investors economist Alex Joiner said.

"There are some early positive signs in China that things might be stabilising, but I don't the think [global] outlook is a robust as it was 6-to-12 months ago," Dr Joiner said.

As a price taker on global markets, a slump in demand for Australia's commodities would punch a big hole in not only the nation's income, but the forecasts Treasury's rosy future has been built on.

While the long-term price Treasury has baked-in for iron ore looks conservative, it's only fair to point out thermal coal and LNG spot prices into Asia are crashing.

GDP weakness

While politicians can gravely discount global distress as beyond their control, there is a lot that could unravel at home which could throw Treasury's optimism into array — and as it is often noted, economic forecasts are only cast to make meteorologists look good.

For a start, the economy is coming off an even lower base than 2018's GDP growth of 2.3 per cent suggests.

In the second half of the year the economy was floundering, growing at an annualised pace of just 1 per cent. On a per capita basis, excluding the impact of population growth, the economy was in recession.

The next reading of first-quarter GDP is expected to be weak as well, although it won't be released until early June, well after the election has been run and won.

There is an essential conundrum that even the Reserve Bank can't fathom. Why is employment growth so strong, yet the broader economy so weak?

Consumers are nervous

Basically, the problem is embedded out in the electorate: consumers are nervous. Wage growth is low, household savings are falling while debt is rising as a percentage of income.

Throw in falling house prices and the "economic sunshine" is clouding over — some would argue alarmingly so.

Given domestic consumption accounts for around 55 per cent of GDP, the mood of "consumer land" (aka the electorate) is not only vital to the outcome of the election, but also the health of the economy.

There have been a couple of promising signs lately.

Retail sales went from bad to good over the course of February's mini economic boom. Consumer sentiment also had enjoyed a solid bounce after the Morrison Government's budget.

Tax cuts

Overall though, the trend has not been the friend of domestic consumption for some time. It is a big part of why the tax cuts have targeted low-to-middle income families.

However, the tax cuts won't do much immediately.

Around $4.5 billion of the approximately $6.5 billion worth of cuts kick in in 2022, while around $700-million-a-year will be handed back over the next three years, according to NAB.

"$700 million in a $3-trillion-economy won't have much of an impact," NAB's chief economist Alan Oster said.

Even then, just how much of the tax cut makes it back into consumption is open to question.

J.P Morgan's Tom Kennedy agrees the obvious headwind facing the Australian economic outlook is consumer spending.

"Weak wages, high household debt and a falling savings rate … none seem capable of being resolved in the short term, it will take multiple quarters, or multiple years," Mr Kennedy said.

"Lower tax will help, but mainly from 2022 when a lot of this stuff will be more meaningful."

Then there's the question of how much of the tax cuts will make it back into the economy in the form of spending.

"Savings are very low and debt is very high, with house prices falling many people will simply want to save and deleverage," Mr Kennedy observed.

Housing slowdown

From a revenue point of view, falling house prices are very much a state treasury headache with the stamp duty flood of recent years drying up.

The impact federally is more indirect.

If housing slows more, so does GDP and given the residential property boom was a big part of the jobs boom, a significant unwinding in construction makes 5 per cent or lower unemployment rather wishful thinking.

Inevitably, a housing and construction slowdown would have nasty consequences for other key sectors and employees in retail, manufacturing and transport.

The are other levers apart from tax that could be pulled, such as cutting interest rates.

CBA estimates the tax cuts put forward by the Coalition have a similar impact to two 0.25 percentage point cuts from the Reserve Bank.

Getting wage growth up from 2 per cent to above 3 percent would give consumers even bigger bang for their buck, but that is rather more a long-term ambition.

The calls for rate cuts are becoming louder as more and more data outside the labour market keep delivering largely unwelcome surprises.

IFM Investors' Alex Joiner says an incoming government would be advised to try and avoid pushing the RBA to cut.

"A cut sends a bad message," Dr Joiner said. "It is reflective of an economy getting worse in the next 12 to 18 months."

Dr Joiner said a better course of action would be to bring any tax cuts forward, sooner rather than later.

"It would give households some breathing space while wages remain weak."

Productivity challenge

However, Dr Joiner said the most important challenge a government should embrace after the election is boosting productivity growth.

"Fiscal stimulus is easy, so are rate cuts," Dr Joiner said "Productivity improvements are harder, take time, more difficult to explain, but ultimately far more important."

That means things like tax reforms rather than tax cuts, further labour market reforms, education and skills spending and investing in productive infrastructure.

"If Australia wants living standards to continue to improve and be sustainable as they have, we need productivity growth."

Sadly, "productivity growth" is not a slogan likely to pass muster with any focus group rounded up by political operatives in coming weeks.

Most likely it will sit in the "to be considered" tray, while probably the best we can hope for in the short term is Treasury got its forecasts right this time.