Fluctuations in aggregate consumer savings rates pose problems for economic forecasters and policy-makers alike. While a number of well known consumption models have been developed which address themselves either to explaining annual changes in aggregate consumption or savings , , , , , or to explaining quarterly changes in consumption , none have been addressed specifically to the problem of analyzing quarterly fluctuations in savings rates. This paper presents and tests a model of consumer behavior which is specifically concerned with short-run fluctuations in aggregate savings rates. In so doing it indicates: (i) that the manner in which consumers’ behavior is affected by their expectations is not fully articulated in the best known consumption models — they are formulated in real terms and neglect the role that price expectations and short-run factors (such as unemployment) play in influencing consumers’ behavior. The authors are assistant professor of economics at Southern Methodist University and assistant professor of business economics at Stanford University, respectively. They wish to thank Stan Johnson, Case Sprenkel, Jim Gibbs, and Don Smith for helpful comments on earlier versions of this paper. They especially wish to acknowledge the use- for advice given by David Huang at many points in this study. Any remaining errors are the soul responsibilities of the authors.