CNBCs Jim Cramer On Monday, fears that the U.S. economy could experience problematic levels of inflation during its recovery from the coronavirus pandemic-sparked recession were allayed.
The “Bad money” The host said there was no question that price pressures were being felt across a number of commodities and industries. However, Cramer said that hardly means America is headed for a period of runaway inflation similar to the 1970s, or even Germany after World War I.
“The economy will not be ruined by ruinous inflation, the stock market will not collapse because of the national debt,” said Cramer. “I think we will see more of a soft landing for this sounding booming economy once the supply chain problems are resolved and the increased unemployment benefits expire in September.”
Cramer said there are a number of economic positives that make him confident the extreme inflation forecasts are unlikely to materialize, such as strong data on both consumer spending and saving rates.
“Saving seems to be more robust than spending. Even if prices rise across the board, the consumer is in better shape than ever before in my life,” said Cramer.
Rising raw material prices for materials like steel, aluminum and sawn timber are remarkable, said Cramer. But he added that these three are subject to tariffs and simply resetting these import duties could improve the situation in the short term.
And while the shortage of semiconductors is disruptive for many industriesCramer, including cars, said he wouldn’t bet on the shortage that lasted this year. He also pointed to comments from Foot Locker’s management suggesting this Port congestion will improve too.
“Look, I’m not saying it will all work itself out smoothly. On Friday, Deere had some troubling things to say about rising goods and freight costs,” admitted Cramer.
However, he stressed that there always seems to be forecasters to sound the alarm about inflation risks. “These people have been consistently wrong for decades,” said Cramer. “We may finally have real inflation, but I don’t think your dire predictions of financial disaster will suddenly come true.”