A forthcoming recession was predicted by many experts, and the S&P 500 has fallen 17% so far this year.
It’s hardly shocking that Americans are concerned about the economy and the stock market given that many experts are predicting an impending recession and that the S&P 500 has dropped 17% this year.
The statistics underpinning the anecdotes were supported by a June Allianz Life Insurance poll. Sixty-six percent of Americans believe that a severe recession is imminent, up from 48 percent in the second quarter of last year.
The purchasing power of their salary will continue to be negatively impacted by growing inflation, according to 82% of respondents, throughout the course of the following six months. 71% of respondents think their salary isn’t keeping up with their escalating expenses at the moment.
The year ended in June saw a 9.1% increase in consumer prices.
According to Kelly LaVigne, vice president of consumer analytics at Allianz Life, “rising expenses on necessities like food and transportation are impacting Americans’ bank accounts.”
It’s possible that some people used their savings to pay for those first hikes. But as time passes, concern grows about how rising inflation may impact saving and purchasing power in the long run, according to LaVigne.
Concern for Stocks
In the meantime, 65% of respondents—up from 57% in the third quarter of 2021 and 54% in the fourth quarter of 2020—say they are keeping more money than they should out of the stock market out of fear of losses.
Compared to 28% in the first quarter and 37% in the fourth quarter of 2021, only 25% of respondents now believe that it is a good time to invest in stocks.
Additionally, 25% of people think that having unlimited potential rewards is worth the danger of future losses. Since Allianz began keeping track of it in 2018, this is the first time the figure has dropped below 30%.
60% of Americans believe it’s critical to have some retirement assets shielded from loss when it comes to funding retirement.
Issues of Generation
A less-than-overwhelming 56% of Millennials (born 1981–1996), down from 61% in the second quarter, stated they have a financial plan to manage inflation, according to noteworthy results for distinct generations.
Seventy-five percent of respondents from Generation X (born 1965–1980) stated their income isn’t keeping up with rising costs, up from 68% in the first quarter of this year.
When it comes to Baby Boomers (those born between 1946 and 1964), 73% are concerned that inflation would prevent them from living the retirement lifestyle they desire. This is an increase from the first quarter’s 66%.
Investors and consumers are clearly pessimistic. Not to downplay anyone’s suffering, but the business cycle encompasses everything. It appears that we are approaching (or are already in) the negative phase of that cycle. We can only hope that it won’t take long.
