On Thursday, CNBC’s Jim Cramer stated that the Federal Reserve is closer to winning its war against inflation than Wall Street might think.
“Price stability… is right around the corner,” he told, adding that the Fed “just needs to be aware there’s really only one area of strength left in this entire economy.”
Stocks fell on Thursday, reversing earlier gains, as Wall Street’s worries about the central bank’s interest rate hikes overshadowed strong corporate profits.
Cramer explained that there’s uncertainty about whether the Fed has tamed inflation enough due to a split in the economy between the services side, which is expanding, and the goods side, which is in a bust.
There’s also the fact that, according to him, that’s mostly wealthy individuals who haven’t seen a decrease in their spending, enabling them to continue spending on both trips and retail.
“The Bed Bath & Beyond’s of the world most likely won’t come back. But the high ends like Tiffany, purchased by LVMH, they are crushing it,” he stated. “But that doesn’t represent the real economy.”
In other words, excessively high spending from people with high incomes is likely blurring the true state of inflation, according to Cramer.
“Maybe [Fed Chair] Jay Powell’s made more progress fighting inflation than [his] colleagues want to believe, except for this one area,” he said.
