The Reserve Bank governor has again warned retailers and lenders the consumption boom of the mid-90s to mid-2000s was a one-off.

Glenn Stevens says growth in borrowing and spending in that period was characterised by a drawn-out, but one-off, adjustment to lower rates of inflation and easier access to credit that made households feel more confident about taking larger loans.

Mr Steven says it was inevitable that growth in borrowing and spending above the rate of income increases would have to end at some point.

The same applies for growth in asset prices, particularly housing prices, which surged over the same period of cheaper credit.

For all the pain the retail and construction sectors are feeling, Mr Stevens says the end of the consumer spending-driven boom could have been a lot more damaging, if not for some good fortune.

"I was not one of those who felt that this was bound to end in tears. But it was bound to end," he told a gathering of economists at the annual Anika Foundation luncheon in Sydney.

"If households had been undergoing these shifts in saving and spending decisions without the big rise in income that is occurring, to which the terms of trade have contributed, it is very likely that we would have had a considerably more difficult period of adjustment."

Glenn Stevens says, rather than being overly critical of the two-speed economy, Australians should be thankful for the boost in national income provided by the record prices for the nation's main commodity exports.

He has previously pointed out how much households are benefitting from the high Australian dollar reducing the cost of imported products, including fuel.

"This is, at least potentially, the biggest gift the global economy has handed Australia since the gold rush of the 1850s," he added.

"Yet it seems we are, at the moment, mostly unhappy. Measures of confidence are down and there is an evident sense of caution among households and firms. It seems to have intensified over the past few months."

He also says rising interest rates have not necessarily been the main cause of falling consumer confidence, with only one rate rise over the past year making it the most stable period for interest rates in the last five years.

Rather a global financial crisis caused by over-indebtedness in many other advance countries has caused Australians to re-evaluate their own saving habits.

"It’s no wonder that people are talking about consumer caution, and no wonder that retailers are finding things very tough indeed," he said.

"Coming after a period in which real consumption had risen by 2.8 per cent a year for a decade, and had outpaced income growth for two decades, no net growth in consumption for three years is quite a big change."

Mr Stevens says it is hard to predict how much Australians will need to save of their rising incomes before they feel financially comfortable and ready to spend again.

However, he points out that the increase in the savings rate has been much more rapid than its gradual decrease during the later part of the 1990s, indicating that the adjustment to lower levels of household debt may be taking place relatively quickly.

While this is more painful for retailers, real estate and financial institutions in the short-term, it may also mean a faster return to households being confident to spend again.

The main threat to this return to more historically normal levels of consumer spending growth would be stagnating household incomes.

Mr Stevens says the boost to income growth from rising terms of trade is probably already coming to an end, as commodity prices plateau.

Instead, he says Australians again need to focus on productivity growth, which has stagnated over the past decade, to maintain rising incomes and living standards.

"There is only one source of ongoing higher rates of growth of real per capita incomes, and that is higher rates of growth of productivity," he concluded.