Continued job growth could help ward off a recession, Jim Cramer says

CNBC’s Jim Cramer thinks there could be too much pessimism floating around Wall Street. He explained on Monday that a continuation of strong job growth, among other things, may stave off a recession this year.

“Will the tariffs hurt? Yes. Will prices go higher? Yes. Could there be shortages? Absolutely,” he said. “But recessions revolve around employment, and there are still so many more jobs than we have people to fill them.”

Fear of a looming recession is potent as many worry about the ramifications of President Donald Trump’s sweeping tariff hikes. But Cramer asserted that a recession is not a given. He thinks companies aren’t inclined to lay off a lot of employees because they may not be able to get workers back when circumstances improve.

It’s difficult derail and economy that is still creating jobs, Cramer continued. He thinks Friday’s labor report will be “fairly robust,” which makes it very hard to “slip into a full-blown recession any time soon.”

With steep tariff hikes — especially on China — investors worry that companies will raise prices, leading to less consumer spending. Cramer said he’s “willing to bet that the American consumer learns to live with less.” While some businesses may get hurt, he continued, consumers could simply switch to more budget-friendly retailers, naming Costco and Walmart. The tariffs are a “government-mandated supply shock,” he said, but added that supply shocks don’t necessarily lead to recessions.

“These two retailers have more market power than any two companies I’ve ever seen,” Cramer said, “They can negotiate lower prices with their suppliers to offset the tariffs, including the Chinese.”

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Disclaimer The CNBC Investing Club holds shares of Costco.