Abstract/Summary

Using a novel survey of U.S. households with randomized information treatments, we examine how fiscal policy uncertainty affects household macroeconomic expec- tations and consumption decisions. We find that news about a 3 percentage point increase in government spending growth crowds out household consumption by ap- proximately 1 - 1.5 percentage points. However, this effect is attenuated by 0.27 - 0.6 percentage points when fiscal uncertainty is introduced, primarily due to weakened government spending growth expectations. These average responses mask substan- tial partisan heterogeneity, as respondents from the party opposing the sitting admin- istration show stronger initial crowd-out responses but significantly smaller reactions under uncertainty. A structural model calibrated to our survey data further reveals that fiscal uncertainty reduces the government spending multiplier primarily through weakened investment responses. Our results highlight the importance of fiscal com- munication in managing macroeconomic outcomes in uncertain environments.