The paper presents evidence that consumer pessimism about unemployment explains recent weakness in consumption. It argues that the buffer-stock model of saving, which incorporates the role of unemployment expectations, better explains consumption behavior than traditional models. The buffer-stock model suggests that consumers save to protect against income uncertainty, with unemployment expectations playing a key role in determining the target wealth level. The model is structurally similar to those of Zeldes and Deaton, but differs in assuming consumer impatience. The paper uses data from the University of Michigan's Panel Study of Income Dynamics (PSID) to estimate income uncertainty, finding high levels of income variability, including instances where income drops to zero. The model is then used to analyze the relationship between income uncertainty and consumption, showing that changes in the probability of "bad events" (such as unemployment) significantly affect current consumption and saving. The paper also discusses the implications of the buffer-stock model for macroeconomic phenomena, including the secular decline in the personal saving rate and the weakness of consumption growth. It concludes that the buffer-stock model provides a more accurate explanation of consumption behavior than traditional models, particularly in the context of income uncertainty and unemployment expectations. The paper also highlights the importance of considering income uncertainty in macroeconomic analysis and suggests that future research should explore the implications of liquidity constraints and other factors.The paper presents evidence that consumer pessimism about unemployment explains recent weakness in consumption. It argues that the buffer-stock model of saving, which incorporates the role of unemployment expectations, better explains consumption behavior than traditional models. The buffer-stock model suggests that consumers save to protect against income uncertainty, with unemployment expectations playing a key role in determining the target wealth level. The model is structurally similar to those of Zeldes and Deaton, but differs in assuming consumer impatience. The paper uses data from the University of Michigan's Panel Study of Income Dynamics (PSID) to estimate income uncertainty, finding high levels of income variability, including instances where income drops to zero. The model is then used to analyze the relationship between income uncertainty and consumption, showing that changes in the probability of "bad events" (such as unemployment) significantly affect current consumption and saving. The paper also discusses the implications of the buffer-stock model for macroeconomic phenomena, including the secular decline in the personal saving rate and the weakness of consumption growth. It concludes that the buffer-stock model provides a more accurate explanation of consumption behavior than traditional models, particularly in the context of income uncertainty and unemployment expectations. The paper also highlights the importance of considering income uncertainty in macroeconomic analysis and suggests that future research should explore the implications of liquidity constraints and other factors.