CNBC’s Jim Cramer on Wednesday explained why inflation has been so persistent for food, housing and wages, but said there are signs of progress.
High food prices reflect the supply squeeze driven by cutting off Russia after it invaded Ukraine, along with obstacles like tough weather and bad harvests. But for Cramer, Walmart offered some hope. Since Walmart can price its “Great Value” products at such steep discounts relative to the name brands, Cramer said he’s “a lot less worried about food inflation.”
Home prices are still hot due to the combination of low inventory and high demand that has especially been driven by millennials entering their prime homebuying years. Cramer said the Federal Reserve has no clear path to cooling those prices: “While the Fed can raise interest rates to tamp down on demand, it also tamps down on supply.”
Unionization and hiring struggles have put an expensive price tag on labor, but Cramer said the central bank might be on the right track in this area. ZipRecruiter, a job-recruiting platform that had a reach of about a quarter of the workforce last year, issued a disappointing forecast, signaling a hiring slowdown and in turn a potential wage cooldown, Cramer said.
“We never want to root for people to lose their jobs, but that’s actually what the Fed wants to see. I think last year’s monster rate hikes have started to have a real impact on the economy, but it takes time,” he said.