Jim Cramer says the Fed should consider retail earnings rather than economic data for its inflation strategy

CNBC’s Jim Cramer said Wednesday that the Federal Reserve needs to pay attention to recent retail earnings reports to plan the rest of its battle against inflation.

“I’m pleading with the Fed to look at what’s going on in individual companies – big ones, not small ones – so they’re a little less ruthless going forward,” he said, adding, “If they’re just focusing on macro government data, they’re going to do a lot more damage than necessary.”

Shares fell on Wednesday after Target reported a drop in sales, spurred by the weight of high inflation on consumers’ wallets as the winter holidays approached. Bad news about what is typically the biggest shopping season of the year for retailers has weighed on retail inventories, as well as the broader market.

Meanwhile, October sales data showed retail spending rose slightly more than expected. However, Cramer said earnings reports from individual retailers are more indicative of the state of the economy than macroeconomic data.

“The real lesson today is that the economy has now moved away from Targetto relocate walmart for several months, and in October, the decline in trade went from one notch to TJX“Cramer said.

Walmart beat its third-quarter revenue and profit on Tuesday, buoyed by its grocery business as cost-conscious consumers turned to the discounter’s products.

TJ Maxx and Marshalls, parent TJX Companies, reported better-than-expected third-quarter earnings, boosted by an industry-wide inventory glut.

“TJX is like a vulture feasting on the carcasses of other retailers. What I found deeply concerning is that their business, again, got better and better as the quarter progressed. That means that October must have been very bad for the rest of retail,” he said.

Disclaimer: Cramer’s Charitable Trust owns shares of TJX companies.

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