The US is running out of time to stave off a depression


CNBC’s Jim Cramer said Tuesday he is warming up, though reluctantly, to the idea of reopening the U.S. economy if lawmakers fail to strike a deal on another coronavirus relief measure and drag their feet on issuing practical safety rules to follow.

“Ideally, we’d keep everything closed until the federal government massively ramps up its testing and contact tracing capacity,” the “Mad Money” host said, but “without more aggressive action from the federal government, we may have no choice but to reopen as the economy spirals into a depression.”

As states slowly authorize nonessential businesses to resume operations amid a health pandemic, most retailers, with the exception of big box stores, are struggling with reopening safely. Restaurateurs face even more challenges, Cramer said.

Walmart, Amazon, Target, CostcomHome Depot — all names in Cramer’s WATCH list of retailers with scale —  and Lowe’s seem to all have it figured out, the host said. Chipotle and Domino’s Pizza are among the few restaurants that are finding success in delivery operations, he added.

“Almost everybody else in the industry is shut and it’s crushing the economy,” Cramer said. “I’d be okay with that if our leaders had a plan” but it “increasingly feels like that’s not an option” for the country.

The uncertainty surrounding a full reopening of the U.S. economy has left Wall Street puzzled, which is part of the reason the market fell in Tuesday’s session. 

The Dow Jones dropped 457 points, or 1.89%, to 23,764.78. The S&P 500 backpedaled 2.05% to 2,870.12 and the Nasdaq Composite retracted 2.06% to 9,002.55, breaking a six-day win streak.

Cramer said he is betting on a U-shaped economic recovery, but that bet hinges on a direction from the federal government to guide a safe reopening. House Democrats on Tuesday revealed a new $3 trillion spending package to expand testing and address the ramifications of the coronavirus pandemic, including rescue funding for state and local governments. The bill could face pushback from the Republican-led Senate. The GOP has reservations about dishing out federal funding to states.

Delaying another bailout could send the U.S. economy into deeper troubles, including a wave of defaults across the country that will hurt financial institutions, Cramer said.

“The whole point of the lockdown is to buy time for the federal government to build out testing and contact tracing, but if the government’s not doing that with alacrity, we’re buying time for nothing,” Cramer said. “I want what [Dr. Anthony] Fauci wants, a much more aggressive federal response, but, at this point, [it’s] wishful thinking.”

Disclosure: Cramer’s charitable trust owns shares of Amazon and Costco.

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