CNBC’s Jim Cramer said Thursday that the Federal Reserve and Trump administration’s economic response to the coronavirus pandemic has been critical to the recovery of American jobs and financial markets.
“They threw a lot into the economy to make it work, and I think you could argue from that number of jobs, it’s working,” Cramer said in “Squawk on the Street,” referring to the record 4.8 million added non-farm jobs. in June.
“I don’t think the stock market is lying here. I think there is a level of speculation, but there are also many companies that would have closed their businesses that didn’t,” added Cramer.
US stock indices rocked with the advent of the new coronavirus, which fell rapidly from its all-time highs in February in bear market territory, defined as more than 20% from a recent peak. But since its bottom in late March, the S&P 500 has risen more than 40%, through Wednesday’s close.
The “Mad Money” host specifically referred to the rapid and comprehensive emergency action by the Federal Reserve, saying that President Jerome Powell “deserves a lot of credit” for helping to keep the corporate bond market running when “it could have gone too far. wrong”.
Cramer also congratulated Treasury Secretary Steven Mnuchin, especially for working across the aisle with Democrats. Collectively, the Fed and Treasury learned lessons from the 2008 financial crisis and this time responded aggressively, Cramer said.
“How did the cruise lines survive? How did the airlines survive? And the answer is that Secretary Mnuchin and the Federal Reserve decided they weren’t going to fail,” said Cramer. “It could be argued that the banks should have cut their dividends already, but injected so much money that they seem safe. The Fed and Treasury decided not to let this turn into a depression.”
Federal Reserve Chairman Jerome Powell and United States Secretary of the Treasury Steven Mnuchin hit their elbows after a hearing by the House of Representatives Financial Services Committee on the oversight of the Treasury Department and the Federal Reserve response to the outbreak of coronavirus disease (COVID-19), on Capitol Hill in Washington, USA, June 30, 2020.
Bill O’Leary | Reuters
Cramer emphasized that there is still a lot of pain and uncertainty in the economy, particularly for small and medium-sized businesses. Despite the increase in jobs in June, the unemployment rate in the United States remains at 11.1%. Additionally, the resurgence of Covid-19 cases in the southern and western states has led governors to pause or reverse some of the economic reopening efforts that helped get people back to work.
Cramer also said that large-scale tax relief measures included as part of the $ 2.2 trillion CARES Act of March, such as direct stimulus controls for Americans and improved unemployment benefits, have also been instrumental in driving the recovery. .
The House passed a bill Wednesday to extend the deadline to apply for forgivable aid to small businesses through a key coronavirus relief program. The legislation, which the Senate passed Tuesday, extends the deadline to apply for Paycheck Protection Program loans until August 8 from June 30. The measure is directed to President Donald Trump for his signature.
With Democrats on Capitol Hill pressing for a new round of coronavirus stimulus, Trump said Wednesday that he supports another round of direct payments to Americans, claiming he wants to give more money than Democrats have already proposed. However, the President did not seem interested in continuing to improve unemployment benefits; federal payments of $ 600 per week in addition to what states offer are due at the end of the month.
“There is stimulus everywhere. The economy is on steroids,” said Cramer. “Now, can you take the economy off steroids once it starts to gain momentum?”
Ultimately, Cramer said that will depend on the trajectory of the coronavirus in states like Texas, Florida and California, where cases are on the rise. “If you start to see a lot of closings, I think it will dampen the momentum,” he concluded.
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