Adam Clarke on Psalms 14:5

There were they in great fear - This is a manifest allusion to the history of the Canaanitish nations; they were struck with terror at the sight of the Israelites, and by this allusion the psalmist shows that a destruction similar to that which fell upon them, should fall on the Babylonians. Several of the versions add, from Psa 53:5, "Where no fear was." They were struck with terror, where no real cause of terror existed. Their fears had magnified their danger.

For God is in the generation - They feared the Israelites, because they knew that the Almighty God was among them.