In response to Jim Cramer, January’s robust jobs report exhibits the economic system can stand up to additional price hikes
CNBC’s Jim Cramer said Friday the January jobs report showed the economy will remain resilient despite the Federal Reserve’s rate hikes.
“If the Fed chair wants to hike rates quarter after quarter, this economy can actually handle it.
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The US economy added 517k jobs in January, beating the Dow Jones estimate of 187k. This is the largest increase in non-farm payrolls since July 2022.
Shares fluctuated on the news but eventually slipped to end the trading session. The S&P 500 fell 1.04% while the Nasdaq Composite declined 1.59%. The Dow Jones Industrial Average lost 0.38%.
Cramer said that while stocks fell because the market is in “good news is bad news” mode — the stronger the economy, the more likely the Fed will have to raise rates — the market was still more or less holding up .
“In my opinion, the comeback from the initial negative reaction in equity markets today before moving lower this afternoon has to do with confidence. Confidence that there will be no recession. Believe that if the Fed wants to hit us with one or two more rate hikes, we’ll be fine,” he said.
The strong economic data comes after the Fed hiked interest rates by a quarter of a percentage point on Wednesday. Chair Jerome Powell signaled that the central bank is not done raising interest rates, despite economic signs that inflation is cooling.
Cramer said that while the Fed still wants to rein in inflation more, he believes a severe recession is “nearly impossible.” with such strong employment growth.
“Anyone who thinks the Fed will have to cut rates quickly later this year because the economy is too weak [is] obviously deluding themselves,” he said.
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