In Kenya, the informal sector has almost 80 percent of the labor force, but is very susceptible to unemployment shocks. The informal workers are not covered by job security, written contracts, and unemployment benefits, which makes them highly vulnerable to changes in household consumption. This paper examines the impact of unemployment in the informal sector on household consumption in Kenya in the period 20102024, when unemployment rates among the youth increased, there were inflationary shocks, and the COVID-19 pandemic. The study utilizes econometric modeling in EViews, that is, the Autoregressive Distributed Lag (ARDL) model using quarterly data of Kenya National Bureau of Statistics (KNBS), the Central Bank of Kenya (CBK) and World Bank indicators. The findings indicate that the increase in informal sector unemployment by 1 percentage point will decrease household consumption by about 1.05 per cent in the long run and 0.42 per cent in the short run. The negative error value of -0.31 proves that approximately 31 percent of disequilibrium is rectified every quarter. Graphical trends affirm that there is high co-movement of informal unemployment and consumption dips especially in the COVID-19 pandemic and the 2023 cost-of-living crisis. The results indicate that informal sector unemployment is a major drag to the aggregate demand in Kenya and a threat to the welfare of households. Policy implications are to increase micro-credit to informal households, investing in SME job creation, and enhancing social protection systems. The research is valuable to the literature because it specifically studies the informal sector, which has not been well examined in the Kenyan macroeconomic literature. It also creates a research gap in the knowledge of the heterogeneity of household responses in urban and rural informal economies.