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Cramer: Hike could have been disastrous

The Fed avoided a market selloff by not raising rates in September, CNBC's Jim Cramer said on Friday.

"This would have been a disaster," he said on CNBC's "Squawk on the Street." "I think the market could have been down 500 to 600 points very quickly."

Cramer said that now investors can focus on investing in the companies that are doing well. September is a historically rough month for markets, and a possible government shutdown could make things trickier, he added. "I always worry about a government shutdown because it has always knocked stocks down about 8 percent."

Cramer said that the Fed should not raise rates because it could harm the auto and housing sectors, which are doing well. "Is there something that says when something is strong we got to make it weaker?" he asked. "Because that is what a rate hike would have done."