The idea that information frictions amplify business cycles is hard to evaluate because information is not easily measured. We propose a quantifiable information friction that amplifies output fluctuations. In our simple model of decentralized trade, income dispersion measures uncertainty about buyer characteristics. Counter-cyclical income dispersion makes the asymmetric information friction stronger in recessions. Using income dispersion estimates to quantify the model's effect, we find that this simple friction more than doubles output persistence and increases output volatility 9-fold. The paper compares the model to aggregate data, tests its mechanism using state-level income dispersion, and examines its indirect predictions for markups and luxury goods.