Many Americans may not be able to define what a 'recession' exactly means, but they think they know one when it hits the U.S. economy and they believe a recession can boost their chances of getting a house.
About 76% of Americans recently polled believe the U.S. is in a recession, according to a study by Cinch Home Services, which also found that nearly half of them think that they would "more likely" buy a home in the event of a recession.
"That actually even surprised me," said Maddie Weirman, a project manager at Fractl, a research firm that helped with Cinch's study, told USA TODAY. "I think the conversation about a recession is becoming more frequent and you hear the word so often, you may begin to think there is an actual recession."
The study also said those polled believed that the effects of the COVID-19 pandemic (40%), high gas prices (36%) and the job market (35%) are the top three reasons for the state of the U.S. economy.
Cinch, a Boca Raton, Florida-based company that provides home warranty services, conducted its nationwide survey of 1,000 Americans between Aug. 9-11.
ARE WE IN A RECESSION OR NOT?: Is the US already in a recession? If GDP falls for a second quarter, one definition says we are
WHICH IS IT?: Is the US housing market in a recession or a correction?
What is a recession?
A recession is generally defined as when the Gross Domestic Product declines for two straight quarters (roughly a six-month period). Cinch's Weirman thinks there may be confusion over the term.
She said 63% of Americans participating in the survey could not identify the correct definition of a recession. According to the National Bureau of Economic Research, a recession is "a widespread contraction in the economy that lasts more than a few months, with each of the three criteria – depth, diffusion and duration – being met to some degree."
Weirman said there may also be further confusion as the top U.S. homebuilder and realtor trade groups say the housing industry is in a recession.
"That only adds to the speculation," Weirman said.
The survey comes as recession fears continue to grow, despite top economists saying the U.S. is not in a recession as employers added 315,000 jobs in August amid rising interest rates and a stumbling economy.
TO BUY OR NOT TO BUY: Despite the slowdown housing prices are still higher than a year ago, realtors say
Uncertainty over who declares a recession
Cinch's survey also reveals that many Americans are unsure about who determines when a recession is happening.
More than a third polled did correctly say that the National Bureau of Economic Research is recognized as the official arbiter of when recessions end and begin. But 10% also thought that the United Nations and President Joe Biden determined when the U.S. is in a recession. Seven percent thought the media determined the recession, and 5% thought House Speaker Nancy Pelosi made the decision.
Should you buy a home during a recession?
Americans are split on whether they will buy a home during a recession, Cinch's study revealed.
Weirman said it appears those surveyed are noticing what experts are saying about the housing industry. For example, the National Association of Home Builders believes the U.S. housing market is in a recession, citing eight straight months of declining homeowner sentiment.
Meanwhile the National Association of Realtors informally, but similarly, defines a housing recession when home sales drop for six straight months.
The falling list prices may be why 44% of Americans surveyed said they would be more likely to purchase a home if the U.S. entered a recession, Weirman said.
However, 42% of American homeowners polled in the Cinch survey said they would be less likely to buy a home during a recession and 14% said a recession would not impact their plans to buy a home.
Meanwhile, 35% of renters polled said a recession would make them more likely to purchase a home, and 48% said it would make them less likely.
Among those participating in Cinch's survey, 72% were homeowners, 24% were renters and the remaining 4% were living somewhere without making a payment.
This article originally appeared on USA TODAY: Is the US in a recession? New poll shows most Americans think so.