Mad Money

Cramer: This jobs report shows we have the 'perfect economy' for stocks

Key Points
  • "Mad Money" host Jim Cramer applauds Friday's employment report, in which nonfarm payrolls increased by 223,000 in May.
  • Cramer says the results represent an ideal economic environment for investors.
Jobs report shows we have 'perfect economy' for stocks

CNBC's Jim Cramer was thrilled when he saw that the U.S. economy added 223,000 nonfarm jobs in May, far overshooting estimates and driving unemployment to an 18-year low.

"You want to know what the perfect economy looks like, at least from the perspective of the stock market? Honestly, it looks a lot like this one, where we have fabulous job growth and very little inflation," the "Mad Money" host reflected on Friday.

To Cramer, Friday's report seemed to challenge a longstanding theory: that as the economy strengthens, the Federal Reserve will be bound to raise interest rates, potentially causing the economy to overheat.

Instead, the Labor Department's report showed that inflation was being kept at bay, with average hourly wages rising by only 8 cents despite the job boom.

"Not only that, but this economy is generating job growth where there ain't been no job growth," Cramer said.

The manufacturing industry — widely thought to be threatened by the rise of automation — added 18,000 jobs, bringing the yearly total to 256,000. The retail space added 31,000 jobs in the face of Amazon. And, despite May's unfavorable weather trends, construction companies tacked on 25,000 payrolls.

"I don't think we would've seen these amazing numbers without tax reform," the "Mad Money" host argued.

Even though most market-watchers figured that the windfall from the tax overhaul would fund share buybacks and dividend boosts, it has also fueled hiring in industries that need more workers, he said.

"Plenty of companies are trying to expand as fast as they can to meet demand. The real [obstacle] is the pool of workers that are available," Cramer said, pointing to Union Pacific's initiative of offering up to $25,000 bonuses to new employees.

"The good news? Formerly considered by some to be undesirable, but actually valuable, workers in our country who have spent time in prison and have been released are now getting the jobs they deserve," he continued. "The bad news? We have such tight immigration laws that we aren't going to see the influx of new workers needed to continue to keep wages low for long."

Cramer also noted the many side benefits of higher employment in the United States: higher gross domestic product, which could help lower the country's deficit; boosted consumer spending; lower student debt; and better minority employment.

And even with looming trade concerns putting pressure on certain sectors, Cramer didn't want investors to lose sight of the big picture.

"Let's not lose the takeaway," he told viewers. "A boom is a boom is a boom, and good news is, indeed, good news for all to see."

WATCH: Cramer unpacks Friday's employment report

Cramer: This jobs report shows we have the 'perfect economy' for stocks

Disclosure: Cramer's charitable trust owns shares of Amazon.

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