New Zealand’s household savings rate has been negative since the early 1990s and has now widened to around 14% of disposable income. The gap between spending and income should narrow over the next few years, given the high household debt burden, a levelling off in house prices, and the prospect that interest rates will rise. The climb in the savings rate should be gradual rather than abrupt, as economic conditions are unlikely to be bad enough to force a quick adjustment. But the chance of a disorderly and rapid adjustment is a risk worth watching.