Cramer has an urgent message for Powell after July’s terrible jobs growth
A surprisingly lackluster jobs report Friday morning left CNBC’s Jim Cramer with one key takeaway: The Federal Reserve needs to cut interest rates. “We have very little job growth, and we have wages that are not going up,” Cramer said during “Squawk on the Street.” “That is when you cut.” Before the open, the government reported nonfarm payroll growth of 73,000 in July — much weaker than the 100,000 economists had expected. May and June were revised down a combined 258,000. The nation’s unemployment rate ticked up, as expected, to 4.2% last month. Wages, as measured by average hourly earnings, rose 3.9% year over year — only slightly higher than estimates. “I’ve been a big backer of Jay Powell,” Cramer added. “But this is a number that says, ‘Jay, you didn’t need to wait’ to cut rates.” The weak jobs number followed the Fed’s decision Wednesday afternoon to hold short-term rates unchanged for a fifth consecutive meeting at 4.25% and 4.5% despite demands from President Donald Trump to cut and dissents from two top central bankers. The Fed ended last year, cutting rates three times: a half point in September, followed by quarter-point reductions in November and December. During Wednesday’s post-meeting press conference, Fed Chairman Jerome Powell said that “modestly restrictive policy” still seems appropriate due to the economy’s strength and the uncertain inflation impact from Trump’s evolving tariff policy. “All that said, there’s also downside risk to the labor market,” Powell said, leaving the door open for the kind of changing data that came two days later. “In the coming months, we’ll receive a good amount of data that will help inform our assessment of the balance of risks in the appropriate setting of [rates],” the Fed chief added Wednesday. Friday’s jobs numbers, however, could increase the likelihood that the Fed acts sooner rather than later. The market is pricing in higher odds of a rate reduction in the central bank’s September meeting, according to CME’s FedWatch tool . In one day, the market odds of a September cut went from nearly 38% to almost 79%. The weak jobs data, along with updated tariff plans from Trump, have sparked a big market selloff. The president signed an executive order Thursday night for “reciprocal” duties ranging from 10% to 41% ahead of Friday’s deadline. The S & P 500 and tech-heavy Nasdaq dropped more than 1.5% and 2%, respectively, during morning trading. Bond yields tumbled, with the 10-year Treasury yield just over 4.25%, the lowest level in nearly a month. “Don’t you find that it’s a little shocking?” Cramer said. Bond yields are plummeting, he added. “They’re going the president’s way.”
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