Adam Jeffery | CNBC
Jerome Powell, Chairman of the Federal Reserve, speaking at the New York Economic Club on Nov. 181128.
The economy is showing signs of weakness that should make the Federal Reserve think twice about raising interest rates after December’s widely anticipated hike, Cramer warned on Thursday.
“There’s enough conflicting evidence that the economy is slowing, perhaps even dramatically, that I think the Fed should wait and see before taking any additional action,” he said.
While U.S. employment is the strongest it’s been in decades, Cramer has also seen distinct signs of economic deflation, or when the average prices of goods and services fall. Generally speaking, the Federal Reserve’s task is to keep a lid on inflation, or the rise of said prices.
In recent months, Cramer noticed costs for various goods sliding in lockstep with recent declines in oil prices. Both home prices and home sales have also declined, often a “prelude” to a downward spiral of lower and lower prices, he said.
Still, with “incredibly low jobless claims,” rising employee wages and seemingly strong holiday retail sales, “it’s easy to see” why the Fed would greenlight one more interest rate hike, Cramer said.
“I’ll let the Fed give us the expected quarter-point hike next week, [but] it’s not ideal,” he said. “However, after that, they would be nuts to keep tightening, and even one more rate hike … could be the rate hike too far.”
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