Vacation planner for For example, for most households, future labor earnings are their primary source of income, but this income is highly uncertain, as well. The unfortunate prospect of unemployment looms large during recessions. The state of unemployment means low (perhaps no) income, and reduced ability to consume goods and services. With this possibility in mind, most households adjust their current actions.
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Although they cannot change the likelihood of a recession by their own actions, they have a certain level of control over the ultimate outcomes. They may save out of their current income today, and use these savings as buffer stock should they become unemployed. A low saving rate today would mean taking a risk in which the low consumption payoff has a high probability. Vacation planner 2016.