How Do Geopolitical Risk Perceptions Affect Macroeconomic and Personal Expectations?

We conduct a survey experiment with a representative U.S. sample to investigate the formation of subjective beliefs about geopolitical risks and their causal impact on macroeconomic and personal expectations. To generate nondeceptive, exogenous variation in geopolitical expectations, respondents receive different expert forecasts about the likelihood of U.S.-China military conflict. While respondents update their geopolitical expectations in response to these forecasts, extrapolations to macroeconomic expectations and personal economic outlooks are limited. However, robust correlations between prior beliefs of geopolitical risks and various macroeconomic and personal variables underscore the necessity of routinely measuring geopolitical risk perceptions in surveys regarding economic expectations.