Whether it is better to rent or buy a home is more of a function of where you live and your type of work than anything else. The economic conditions play a role in determining both of those factors. Let us look at all three components.
Where you live
Real estate, and the housing market in particular, is a strongly local commodity. A housing boom in Salt Lake City does not impact Detroit at all. An overabundance of apartments in Atlanta does not alter a scant supply of space in San Francisco. So, while a particular situation in Las Vegas will lead you to choose rental housing, the same situation in Orlando may have you buying a home.
The biggest component of this factor is the ratio of available homes and apartments. If there is a lack of homes, for any reason, relative to the number of people who want one, the price will be higher compared to renting. On the other hand, a recent rash of apartment building may provide a reason for lower than normal rents and encourage waiting on home ownership.
Type of work
The permanence and portability of your job should also have a significant impact on the decision between renting and buying. If you are unlikely to leave the area anytime soon, the desirability of purchasing a home will be much higher. Frequently moving or the possibility of being required to leave the area will dampen enthusiasm for purchasing a home, due to the high costs associated with buying and selling property.
The type of work that you have will also determine how much money is available to devote to housing on a regular basis. With owning a home generally being more expensive than renting, those people who are in the lowest levels of the economic ladder are also the most likely to be renting.
Economic climate
The economic climate plays into both factors that impact the rent vs. buy decision.
For the location, the climate dictates if the population is growing or shrinking. A growing population naturally occurs when the local economic climate is good. As more jobs are generated, more people will want to move in, and generally tends to encourage home ownership. This is due to the scarce nature of real estate. The more people who want something, the more the price will go up, and those who own see a correspondingly greater benefit.
The type of work available is also a function of the economic climate. A poor economy has a higher proportion of service jobs than a healthy economy. Manufacturing and knowledge jobs tend to pay more than service jobs. Hence, a strong economy means more money and a higher tendency to want to own.
Summary
With the economic climate helping shape both the local housing market and the type and availability of employment, it helps influence the buy vs rent decision. Other factors particular to a given location may be smaller or larger than the economic climate due to the truly local nature of the housing markets.
With that in mind, we can draw a general conclusion. A good economic climate will encourage the ownership of your housing, while a poor economic climate will cause more people to seek rental housing instead.