The Magpies are 19th in the Premier League after last week's 5-1 loss at Crystal Palace and the Reds have won their last four matches, the last being a 6-1 win at Southampton.
"Nobody is happy at this football club," said McClaren.
"All of sudden we have gone three steps forward and five or six back."
The Magpies have only managed two league wins in 14 games, and conceded 30 goals in that time - the joint most with Bournemouth.
"We believe in these players but confidence is very fragile," he continued.
"People question a lack of character and fight and it appears that way, but these are young players, this is what they are going through.
"This experience they have to go through to come through it - that bit of adversity in a big club in a tough situation and be stronger when they come out of it."
Meanwhile, defender Mike Williamson, recalled from his loan spell at Wolves, is set for a scan on a hamstring problem he picked up in training.
"When it goes against you, it goes against you," said the Newcastle coach.
Newcastle United head coach Steve McClaren says confidence is "fragile" going into Sunday's encounter against in-form Liverpool at St James' Park.