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CNBC’s Jim Cramer said it sometimes seems like the Federal Reserve is “all-powerful.” However, while the central bank can make conditions better or worse, it can’t control everything, he continued.
At the end of the day, he said, “we still have a market economy, and markets are inherently boom and bust creatures.”
“The action in the stock market doesn’t always sync up perfectly with the real world, but various sectors come in and out of fashion based on the real-world health of the economy,” he said. “You need to know how to take the economy’s temperature, and looking at the unemployment rate or listening to pundits —even me — doesn’t really cut it.”
When the economy seems to be doing well and employment data is positive, Cramer said investors should keep an eye on certain groups of stocks that can signal a slowdown. Some sectors are more economically sensitive than others, he said, or they are more likely to see losses early on in a downturn.
