Fed has enough economic data to justify a rate cut

CNBC's Jim Cramer insisted on Thursday that there was enough economic data that would justify the Federal Reserve "taking preventative measures and lowering interest rates."

The comments will come one day before a speech that Fed Chairman Jerome Powell is expected to make at an annual meeting of central bankers and economists in Jackson Hole, Wyoming, on Friday.

"The economy is doing well now, but if we continue to have more and more tariffs, it could deteriorate," said the host of "Mad Money." "In this case, the Fed must cut rates as insurance, bringing our short-term interest rates closer to the rest of the world."

In the face of the global economic downturn, the US consumer remains strong, Cramer said, pointing to low unemployment in the country and growth in sales at major retailers like Target and Walmart. Nevertheless, the US economy is not limited to spending, he added.

In addition, Cramer said the challenges in Europe, especially in the UK, French and German economies, could begin to spread in the United States. The yields of German government bonds are negative, a situation in which debt issuers are paid to borrow.

"Can we forget this global weakness? I would not bet if I was the Fed," said the host. "We are now witnessing a global slowdown in which the United States seems to be the rare exception: the Fed should ensure that it stays that way."

Although the retail giants are doing well, Cramer noted that distressed department stores are expected to cut many jobs in the years to come. The emissions of Boeing 737 Max could have a negative impact on US GDP growth, said the host. Low mortgage rates are expected to boost housing, but home builder Toll Brothers has revealed that demand for new homes has fallen by more than 3% in the last quarter.

Activities also slowed down in the areas of lumber, natural gas, automobiles, rail traffic and freight costs, Cramer said.

"I am not a staple whose price increases unless I count gold," he said. "This is due in part to the fact that the auto market is in bad shape and that many products are meant for cars."

President Donald Trump, who has planned a series of new tariffs on imports from China that will come into effect on Sept. 1 and Dec. 15, this week ordered the independent Fed to reduce the 100-point benchmark rate basic.

"One of the reasons we are in this position is that the Fed has tightened up too aggressively by the end of last year," Cramer said. "Given the pessimism and fear of the president's misguided tweets, Jay Powell has every interest in giving the economy some leeway."

In July, the US Federal Reserve introduced a reduction in the interest rate by a quarter point in the target range of 2% to 2.5%. It was the first interest rate cut since the financial crisis more than a decade ago.

Investors want the central bank to change its monetary policy to allow cheaper borrowing and boost business investment.

"You can easily say that there are enough good things here to compensate for the bad ones.I honestly, I will not disagree with that," said Cramer, "but I did a ton of work on the trade war itself … and I think it would be delusional to obtain your hope of reaching an agreement as soon as possible. "