Not at all. With the obvious exception of Jews (who after 1935 were residents, but not citizens of Germany), Germans did not live in fear. They lived in happiness. In reality, the German nation in Nazi Germany was probably the happiest in the history of mankind (and definitely in late 1930’s).
Why? Because happiness means that all key genuine needs (not desires!) of the individual in question are satisfied. And that’s exactly what Nazis did – identified and satisfied the fundamental needs – financial, functional and emotional (physiological, safety, social belonging, esteem, self-actualization and – what was very important, self- transcendence).
Self-transcendence means the fundamental need to serve a purpose, goal, entity, etc. higher than one’s individual self. Some social psychologists argue that it is precisely the fact that the typical modern self-centered individual in a liberal democratic society does not serve any purpose than oneself, is the fundamental reason why so many in the prosperous Western countries are so deeply unhappy.
The Nazis satisfied this fundamental human need by creating an opportunity for its citizens (in fact, making it mandatory) to serve the Greater Germany – the German Reich.
In addition to satisfying these fundamental human needs (actually, in the process of satisfying them), the Nazis solved the vital, fundamental and immense problems that prevented the Germans from being genuinely happy.
They eliminated unemployment (in 1938 there was actually the shortage of workers in the German economy), raised the living standards of German workers to the highest in Europe, did away with inflation, brought back all German lands into Greater Germany (the Third Reich), did away with insulting terms of the Treaty of Versailles, transformed the devastated country into an economic, political and military European superpower, did away with social and class division, essentially uniting the nation top to bottom, created powerful and extensive social lifts, etc., etc.
For the first time in their lives, the Germans felt (knew, actually), that their state, their government and their Leader genuinely cares about them and genuinely works for them.
And that’s why they so efficiently worked for them and so bravely and heroically fought for them – to the very last day of the Third Reich. That’s why they so adamantly resisted the efforts of Allied powers to ‘liberate’ them from Nazi ‘dictatorship’. Because the Allies were liberating them from happiness – and no individual in his or her right mind would want to be liberated from that.
This is actually the reason why anti-Nazi resistance was practically non-existent in Germany – the overwhelming majority of Germans considered the few opponents of Nazi regime as not just traitors, but their sworn enemies who wanted to destroy their genuine happiness. And this is the primary reason why the 20th of July military coup received no support at all outside a rather small circle of conspirators.