* ELECTION - Prime Minister Scott Morrison is expected to call a federal election in either March or May. The traditional May budget has already been brought forward to March 29, suggesting a May poll is the likely option. Having a minimum campaign length of 33 days, there will be a cloud of uncertainty hanging over the economy until the election result is known.

* COALITION VS LABOR - Bookies and opinion polls have the government again losing to Labor, as they wrongly predicted for the 2019 election. The government will boast a recovering economy, an expected drop in the unemployment rate, an improving budget position and a high level of vaccination against COVID-19. However, it is suffering from trust and perception issues after a series of scandals. Rogue government backbenchers have also muddied the response to the pandemic. And while it has committed to net zero emissions by 2050, there are still calls for the government to go further. Labor has yet to deliver its full suite of measures, with its approach to taxation likely to meet with tough scrutiny.

* ECONOMY - Election aside, the strong recovery from the 2020 COVID-19 recession is set to resume after last year's interruption from the Delta variant-linked lockdowns. Economists expect consumers will lead the charge as households dip into their $220 billion of savings that have accumulated during the pandemic. Business has also recently upgraded their investment intentions. However, uncertainty surrounds the possible impact on activity from the Omicron strain. At this stage the Reserve Bank of Australia is forecasting economic growth of 5.5 per cent in 2022, well above the long term trend of 2.8 per cent.

* LABOUR MARKET - Employment is also expected to make a quick recovery after the heavy job losses incurred when half the nation was in lockdown. The unemployment rate is expected to return to below five per cent for a sustained period, perhaps dipping below four per cent as the economy reaches "full-employment". Job advertising is at its highest in 13 years.

* WAGES GROWTH - Adequate wages growth has been the missing link in the economy for some years. At an annual rate of 2.2 per cent it is currently lagging the rate of inflation, intensifying the rising cost-of-living pressures households are facing. The Australian government is again predicting wages growth of three per cent by 2023/24, a level not seen since 2013.

* INFLATION - The annual rate of the consumer price index stands at three per cent, underpinned by record petrol prices. Underlying inflation, which smooths out volatile price swings, has crept up to 2.1 per cent and the highest level in seven years. The worry going forward is Australia gets sucked into the global inflation spike generated by rising oil prices and supply chain disruptions caused by the pandemic. US inflation at close to seven per cent is the highest in almost four decades.

* INTEREST RATES - RBA governor Philip Lowe has repeatedly said the central bank won't lift the cash rate from its record low level of 0.1 per cent until underlying inflation is sustainable within its two to three per cent target band. To get there, Dr Lowe wants to see the unemployment rate close to four per cent and wages growth above three per cent. For some time Dr Lowe did not expect a rate rise before 2024, now it is not so clear. Financial markets are pricing in the risk of rate rises from next year, although Dr Lowe is not expecting a move so soon.

* CONFIDENCE - Business and consumer confidence has held up in the aftermath of the Delta shutdowns, boding well for household spending, business investment and employment. However, there are niggling concerns about the Omicron variant, coupled with concerns over the inflation and interest outlook, which could stifle the positive mood.

* COMMODITIES - Despite the growing trade rift over a number of commodities with China and the steep fall in the iron ore price, Australia has managed to secure record monthly trade surpluses, buoyed by strong demand for coal and cereal exports.

* CREDIT RATINGS: Australia remains one of the few countries to hold a triple-A credit rating from the world's three major rating agencies. Standard & Poor's has removed Australia from a negative outlook and the risk of a downgrade in the next few years. A downgrade can impact the cost of borrowing for Australian entities when raising funds in overseas markets.

Australian Associated Press