Most American investors now expect the stock market to crash as COVID and inflation worries end a summer of optimism, says Allianz survey

• 54% of American investors see the stock market heading for a crash, according to a survey by Allianz Life released Monday.
• The Q3 survey found respondents worried that Delta infections would pull the US back into recession.
• Survey respondents also expected multiyear high inflation to eat into their purchasing power.

Most US investors now foresee stocks heading toward a crash, as they fear resurgent COVID cases will throw the economy back into recession while inflation remains elevated, according to a survey released Monday by insurer Allianz.

A 54% majority of American investors say they are worried that a big market crash is on the horizon, said Allianz Life Insurance Co. of North America in its third-quarter Market Perceptions survey. That rate is the highest of 2021, surpassing the 45% of respondents in the second quarter and 52% in the first quarter.

"People were feeling better about market risks to their retirement this summer when we saw that brief return to normalcy before getting a Delta-driven reality check," said Kelly LaVigne, vice president of consumer insights at Allianz Life, in a statement with the survey.

But now more than two-thirds said they are protecting their money from losses by keeping some of it out of the market. In particular, worries about the coronavirus and inflation gripped most investors.

LaVigne said that 69% are worried a rise in COVID-19 infections will cause another recession. Cases spiked during the summer as the highly transmissible Delta variant spread but has started to slow. Still, the US on Friday surpassed 700,000 deaths related to the disease. And an estimated 70 million eligible Americans remain unvaccinated, according to an Associated Press report.

Meanwhile, 78% of respondents expect prices to move higher over the next 12 months, and 69% believe inflation will hurt their purchasing power in the next six months.

Recent data have stoke inflation worries. Last week, The core personal consumption expenditures index, a key inflation measure watched by the Federal Reserve, rose to 3.6% in August, the highest rate since May 1991. And Fed Chairman Jerome Powell recently said inflationary pressures from supply-chain disruptions and labor shortages may persist longer than anticipated.

The quarterly online survey from Allianz Life was conducted in September with a sample of 1,005 respondents who are at least 18 years old. A 53% majority of investors responding to the inquiry said they had investable assets of more than $200,000.