3  In the FRB/US model, about 40 percent of households are estimated to be rule-of-thumb consumers, implying that they generally spend most of their current income. The remaining households are life-cycle consumers, implying that their spending decisions are influenced by their expected permanent income rather than their current income.
However, these consumers are nonetheless relatively sensitive to expected changes in income over the next several years because they are assumed to discount future income at a high rate, reflecting its uncertain nature.