Consumer confidence in U.S. equity markets has deteriorated to its lowest level in four years, according to the Q2 2026 Quarterly Market Perceptions Study from the Allianz Center for the Future of Retirement. Just 25% of Americans believe the current environment is favorable for investing, down from 34% in the first quarter. The last time sentiment dipped this low was in Q2 2022, when inflation was eroding household purchasing power.
The survey of more than 1,000 U.S. adults, conducted in April 2026, reveals that recession fears have intensified sharply. 62% of respondents said they worry a major economic downturn is imminent, up from 54% in Q1. Millennials (65%) and Gen Z (63%) expressed the highest levels of concern, while baby boomers were the least worried at 57%.
Nearly seven in ten respondents (69%) said continued market volatility could negatively affect their long-term financial plan. More than six in ten (61%) said they would stop working with their current financial professional if that advisor failed to help them reduce market exposure. That finding underscores the pressure on advisors to address client anxiety proactively, particularly as many investors are already repositioning their portfolios.
Half of all respondents said they had already reduced risk in their portfolios in response to recent market swings. 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. This shift comes as the Federal Reserve continues to hold interest rates at elevated levels, and as the AI-driven market rally has narrowed to a handful of mega-cap stocks.
Younger investors are feeling the strain in tangible ways. 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," said Kelly LaVigne, vice president of consumer insights at Allianz Life. "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."
The findings align with other recent research showing that many Americans feel unprepared for retirement. A separate AmeriLife survey found that only 47% of peak-earning Americans feel on track for retirement. Meanwhile, 69% of older Americans doubt Social Security solvency as the trust fund depletion date nears 2032.
For advisors, the message is clear: clients are demanding more than just investment returns. They want strategies that explicitly address downside risk and volatility. "Market volatility makes it more difficult for Americans to feel confident about your financial future," LaVigne said. "A financial professional can help create a strategy that includes protection to help reduce the impact of volatility and support long-term retirement goals."
