77% of Investors Fear a Recession, but Here's Why Many Are Investing More
Amid inflation concerns and market volatility, more than three-quarters (77%) of non-retired investors are concerned about a U.S. recession over the next 12 months, according to a recent Nationwide survey. Yet instead of pulling back, many are increasing their investments and looking for new opportunities.
Here's why investors remain nervous about the economy while continuing to put money to work, and what financial experts said everyday investors can learn from the trend.
Read More: How I Built a $1 Million Net Worth Through Smart Investing—And How You Can, Too
Find Out: 5 Low-Effort Ways To Make Passive Income (You Can Start This Week)
Do Economic Indicators Point to a Recession?
The majority of non-retired investors believe a recession could be looming, but recent economic and market data may not support these fears.
"It's understandable that many investors remain concerned about the possibility of a recession," said Mark Hackett, chief market strategist for Nationwide's Investment Management Group.
"After all, this cycle has been anything but ordinary," he continued. "Markets and the economy have navigated a global pandemic, historic inflation, an aggressive rate-hiking cycle, geopolitical conflict, ongoing supply-chain disruptions, and now an artificial intelligence investment boom that has created its own set of enthusiasm and fears of missing out."
Still, several key indicators have remained resilient. Since its October 2022 low, the S&P 500 has gained more than 100%, while corporate America has delivered seven consecutive quarters of double-digit earnings growth. Nominal GDP also grew 7.9% quarter-over-quarter in the second quarter of this year and is up 6.5% year-over-year.
"That is hardly an economic backdrop typically associated with a recessionary environment," Hackett said.
While economic uncertainty remains high, the economy and markets have largely continued to move forward.
Why Investors Are Buying Despite Recession Concerns
According to the survey, 33% of non-retired investors plan to take advantage of investment opportunities now, up from 21% in summer 2024. Additionally, 22% said they plan to manage their investments more aggressively, compared with 16% in 2024. The data suggests that many investors are leaning into the market rather than retreating from it.
"One of the defining features of this cycle has been the market's tendency to recover almost as quickly as it falls," Hackett said. "That is not necessarily a bad thing, but it does shape investor behavior."
In March, the S&P 500 fell nearly 9% before recovering those losses in just 11 trading days, one of the fastest rebounds in recent history. Another strong rally followed in July. As a result, many investors have grown accustomed to viewing market pullbacks as buying opportunities rather than warning signs.
"Repeated V-shaped recoveries can create a powerful conditioning effect, encouraging investors to view weakness as an opportunity rather than a more material warning," Hackett said. "Over time, the market develops a reflexive quality in that pullbacks attract buyers, buyers accelerate the rebound, and each successful recovery reinforces the impulse to buy the next dip. Whether that behavior ultimately proves correct is a separate question."
Many Investors Still Lack a Plan for Market Volatility
While investors appear willing to ride out more market uncertainty, the survey suggests many may not be fully prepared for the volatility that often accompanies economic slowdowns. According to the survey, 29% of non-retired investors said they have no plan in place to protect their assets from market volatility, while another 10% aren't sure whether they have one.
"Market volatility is never comfortable, but it is a normal and unavoidable part of investing," Hackett said. "Rather than reacting emotionally to short-term swings, investors should focus on maintaining a diversified portfolio that aligns with their long-term goals and risk tolerance."
Hackett noted that some of the market's strongest days often occur during periods of uncertainty, making it costly for investors to move in and out of the market based on short-term headlines. Instead, he recommends periodically rebalancing portfolios if allocations drift too far from intended targets and avoiding major investment changes driven by fear.
"Most importantly, keep perspective and have a financial plan," Hackett said. "Remember that corrections and growth scares are a recurring feature of the investing landscape, not an exception relegated to historical market periods."
Maintaining realistic expectations may also help investors stay disciplined during turbulent markets. On average, the S&P 500 experiences three to four drawdowns of 5% annually and one pullback of 10% each year. Declines of 15% typically occur once every two years, while drops of 20% or more happen approximately once every three years.
"If those statistics are somewhat unsettling for an investor," Hackett said. "Remember, volatility is the price investors pay for long-term gains."
What Investors Can Learn From the Survey
The survey shows that many investors continue putting money to work, despite recession fears.
While investors shouldn't ignore economic risks, experts note that long-term success often depends on staying focused on maintaining a diversified portfolio and resisting the urge to make emotional decisions during periods of uncertainty.
While no one can predict whether a recession will occur, having a clear investment plan is typically far more valuable than trying to time the market.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: