CNBC’s Jim Cramer said on Thursday that the Federal Reserve was closer to winning its battle against inflation than Wall Street believed.
“Price stability … is just around the corner,” he said, adding that the Fed “just needs to be aware that there’s really only one area of strength left in this whole economy.”
Stocks fell on Thursday, reversing earlier gains as Wall Street concerns over central bank interest rate hikes overshadowed strong corporate earnings.
Cramer explained that there is confusion about whether the Fed has reduced inflation sufficiently due to a bifurcation of the economy between the services side, which is booming, and the goods side, which is in full collapse.
There is the additional factor that it is largely wealthy people who have not seen a decline in their purchasing power, which has allowed them to continue to spend on both travel and retail. , he added.
“THE Bed bath and beyonds of the world will probably not return. But high-end like Tiffany, bought by LVMHthey crush it,” he said. “But that doesn’t represent the real economy.”
In other words, the disproportionately high spending of high-income earners likely obscures the true state of inflation, according to Cramer.
“Maybe [Fed Chair] Jay Powell has made more headway in fighting inflation than [his] colleagues want to believe, except for this area,” he said.
