According to the Allianz Life Insurance Company 2023 Q2 Quarterly Market Perceptions Study, rising interest rates caused a financial impact for 61% of Americans, but it hasn’t been all terrible for everyone as another 38% stated the higher interest rates have improved their financial status.1
According to the survey, there are more Americans who believe that a recession is imminent than there were in the first quarter of 2023, with 64% of them expressing this concern. In May 2023, more Americans expressed concern about a recession than the 62% who did so in the fourth quarter of 2022.
According to Kelly LaVigne, vice president of consumer insights at Allianz Life, “rising interest rates sometimes feel like a double-edged sword.” While savings accounts are generating more interest, borrowing money for large purchases like a home is becoming more expensive. Many Americans are concerned that rising interest rates are a sign of an impending recession.
Two-thirds of Americans say they are keeping more money out of the market due to risk aversion, indicating that they are still being cautious about the state of the economy.
These reservations, according to LaVigne, are the reason why some Americans are suffering from high interest rates but not everyone.
According to LaVigne, not enough people consult with financial experts about their options for long-term investing and retirement planning. “The ones that are benefiting from higher interest rates are the ones who have some money in a buffer product that can offer them different levels of protection, something like a fixed-index annuity that’s giving them 8 or 9%,” she said.
He noted, citing worries expressed by survey participants, “Financial advisors can help with products like annuities, which offer better protection from volatility.”
69% of respondents prioritised having retirement funds in a financial instrument that protects against market losses, up from 60% last year. The study found that 62% of respondents were prepared to part ways with their financial advisor if they were unable to shield their investments from risk.
The baby boomer group has the greatest economic concerns, with 67% of them expressing concern about an impending severe recession, followed by 63% of millennials and 61% of Gen X.
With 80% of respondents saying they are concerned about the sustainability of the programme, Americans are likewise disproportionately concerned about the future of government programmes like Medicare and Social Security. With 86% of Gen X respondents expressing concern about federal programmes for seniors, they were the most pessimistic group, followed by 79% of millennials and baby boomers.