Recession fears and portfolio defensiveness are rising sharply as confidence in markets hits a four-year low, according to Allianz Life
Just one in four Americans believes now is a good time to invest in the market, according to new research from Allianz Life Insurance Company of North America that points to a sharp deterioration in consumer confidence since the start of the year.
The Q2 2026 Quarterly Market Perceptions Study from the Allianz Center for the Future of Retirement found that only 25% of Americans currently feel positive about market conditions for investing, down from 34% in the previous quarter. The last time sentiment fell this low was Q2 2022, when surging inflation rattled household finances.
Concerns about a near-term recession have intensified and 62% of respondents said they worry that a major downturn is imminent, up from 54% in Q1. Millennials (65%) and Gen Z (63%) expressed the highest levels of concern, while boomers were the least worried (57%).
Seven in ten respondents said continued market volatility could negatively affect their long-term financial plan, and more than six in ten said they would stop working with their current financial professional if that advisor failed to help them reduce market exposure.
"Market volatility makes it more difficult for Americans to feel confident about your financial future," said Kelly LaVigne, VP of consumer insights at Allianz Life. "During times of volatility like we have experienced recently, Americans may pull back or reduce risk exposure. A financial professional can help create a strategy that includes protection to help reduce the impact of volatility and support long-term retirement goals. These findings highlight a growing need for strategies that help manage risk while maintaining long-term growth potential."
Investors pull back on risk
Half of all respondents said they had already repositioned their portfolios to reduce risk in response to recent market swings, and 58% said they are actively looking to add more protection to their holdings.
Younger generations are moving fastest: 59% of Gen Zers said they had made their investments less risky, compared with 55% of millennials, 45% of Gen Xers and 41% of boomers.
Appetite for taking on additional risk to offset inflation has also softened. Less than half (47%) said they were comfortable with increasing risk exposure to counter inflation's effects, down from 54% the prior quarter.
Nearly two thirds of Gen Zers (62%) said they were concerned about potential layoffs stemming from an economic downturn this year, compared with 47% of millennials and 37% of Gen Xers. Three in four Gen Zers (75%) reported being unable to contribute to their savings at normal levels over the past six months.
"Younger investors are feeling the strain of today's economic uncertainty in very real ways from concerns about job security to reduced ability to save," LaVigne said. "The good news is they have time on their side. Starting early with a strategy that balances growth opportunities with protection can help them navigate volatility now while building a stronger foundation for the future."
