As New York Yankees pitcher and amateur philosopher Yogi Berra once noted: "It's tough making predictions, especially about the future."

It is a line with which Treasurer Josh Frydenberg could identify, especially after his famous Back in Black budget night of May 2019, when he declared the run of federal budget deficits finally at an end. Who knows what ever happened to all those coffee cups?

Almost two years on from that fateful night — which preceded a global pandemic, the worst recession in nearly a century and a $311 billion Commonwealth stimulus package — there is still no surplus in sight, with ongoing deficits adding ever more to the national debt pile.

Still, it hasn't dented the enthusiasm from economists and politicians to try their hand at gazing into the crystal ball, especially with an election looming early in the new year.

And so we come to MYEFO, the mid-year budget update that most years is given a light brush over by the Treasurer and the Canberra press gallery. Except for this year.

The economy may be smaller than before the pandemic. And we may have just endured a massive 1.9 per cent collapse in gross domestic product (GDP) in the September quarter, the third worst in history, with wages being stuck in the doldrums for most of the past decade.

But, according to today's forecasts, that's all about to change.

The centrepiece of the update is a bold prediction that wages will grow 11 per cent over the next few years until 2024/25, which will power the economic recovery, lowering the projected deficits a touch and slowing the debt growth.

But every year for most of the past decade, Treasury and the Reserve Bank have made similar forecasts about wages.

Each year, they've been bitterly disappointed, not that that has deterred them from making the very same wages revival predictions 12 months down the track.

As Mr Frydenberg noted: "It's not that long ago that the Treasury was contemplating a collapse in GDP of more than 20 per cent and feared the unemployment rate could rise as high as 15 per cent."

Happily, those particular predictions were well wide of the mark.

For a start, jobs growth has been far greater than anyone could have imagined. In November alone, an extra 366,000 new jobs were created as NSW and Victoria threw off the lockdown shackles and roared back to life.

The unemployment rate has plummeted to 4.6 per cent and there has been a surge in participation as more Australians scramble for work.

Across the nation, there is talk of staff shortages and difficulties in recruiting.

As in any marketplace, shortages of this magnitude should translate into higher prices. If we continue to experience such tight conditions, ultimately, it seems a reasonable assumption that wages must rise.

But, while the lockdowns have ended, we are still a long way from being anywhere close to a return to normality.

On the demand side, those massive stimulus payments are still working their way through the economy, contributing to a near-record level of household savings, much of which is being spent in the lead-up to Christmas.

And then, on the labour supply side, we've just endured two years of zero immigration, where our population has declined, a rarity in the post-war era, partly explaining the tight labour market.

Should we return to a mass immigration program, the kind favoured by big business, to provide fodder for hospitality and other service industries, those staffing shortages will ease. And so too will the pressure for wage rises, putting a large dampener on the budget forecasts.

Predictions are only as good as your assumptions. And, in this type of environment, it's mighty dangerous to assume anything.

One of the biggest assumptions is that the bounce back in economic activity and hiring will follow a similar trajectory to last year when we emerged from the first phase of lockdowns.

But we emerged then into a COVID-free economy, isolated from the rest of the world.

Will a less lethal Omicron variant snuff out Delta, thereby not posing as much of a danger to public health and allowing a gradual return to normal life?

Or will older Australians, fearful of a mass outbreak, retreat from activity and spending?

We won't know all the answers until well after the federal election. And, by that stage, it will be time for an entirely new set of predictions.