Jim Cramer says strong January jobs report shows economy can handle further rate hikes

CNBC’s Jim Cramer said Friday that the January jobs report shows the economy will remain strong despite the Federal Reserve’s rate hike.

“If the head of the Fed wants to raise interest rates quarter after quarter, this economy can really handle it. And this is the real takeaway from this amazing number of jobs,” he said.

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The US economy added 517,000 jobs in January, beating the Dow Jones forecast of 187,000 gains. This is the largest increase in non-farm payrolls since July 2022.

Shares fluctuated on the news, but eventually fell towards the end of the trading session. The S&P 500 dropped 1.04% and the Nasdaq Composite fell 1.59%. The Dow Jones Industrial Average lost 0.38%.

Cramer said that while stocks tumbled with the market in good news-bad news mode — the stronger the economy, the more the Fed will likely have to raise interest rates — the market was still more or less holding its own.

“I believe that the recovery from the initial negative reaction in the stock market today before moving lower in the afternoon is due to faith. Faith that there will be no recession. The belief that if the Fed wants to hit us with one or two more rate hikes, everything will be fine,” he said.

Strong economic data came after the Fed raised interest rates by a quarter of a percentage point on Wednesday. Chairman Jerome Powell signaled that the central bank has not finished raising rates despite economic signs that inflation is slowing down.

Cramer said that while the Fed still wants to bring inflation down even further, he believes a major recession is “almost impossible.” with such strong job growth.

“Anyone who thinks the Fed will have to cut rates quickly later this year because the economy is too weak. [is] They are clearly deceiving themselves,” he said.