Over the longer run, the . economy is likely to see an important rebalancing of our spending and production. Higher household saving rates imply that eventually other types of spending will need to fill the breach in aggregate demand. The most likely candidates are net exports and business fixed investment. For the past several years, low personal savings and substantial budget deficits have led to large inflows of foreign capital and large trade deficits. As we move to more sustainable levels of consumption and increased fiscal responsibility, capital inflows will.
