Cramer: 'I'm more nervous than I was before' about coronavirus economic risks after Fed rate cut

• CNBC's Jim Cramer said that the Federal Reserve's emergency interest rate cut makes him more concerned about the possible economic risks from the coronavirus.
• "I'm now nervous. I'm more nervous than I was before," Cramer said on "Squawk on the Street."
• The move helps Wall Street but does little to persuade consumers worried about catching the coronavirus to leave their home and spend money, Cramer said.

CNBC's Jim Cramer said the Federal Reserve's emergency interest rate cut on Tuesday morning makes him more concerned about the economic risks from the coronavirus.

"It's great that the Federal Reserve recognizes that there's going to be weakness, but it makes me feel, wow, the weakness must be much more than I thought," Cramer said on "Squawk on the Street."

"I'm now nervous. I'm more nervous than I was before."

The move helps Wall Street but does little to persuade consumers worried about catching the coronavirus to leave their homes and spend their money, Cramer said.

Stock trading around the Fed's surprise rate cut of 0.5% saw the Dow Jones Industrial Average swing from down over 350 points to up over 350 points. The Dow then flop-flopped between losses and gains.

The Dow accelerated to the downside, off more than 900 points at the low, after Fed Chair Jerome Powell's late-morning news conference explaining the reasoning behind the rate cuts. The Dow closed down 785.91 points, or nearly 3%. 

The rate cut puts the fed funds target between 1%-1.25%. The Fed reduced rates in three 0.25% moves last year.

Hopes for a Fed cut rate sparked a powerful rally Monday. The Dow soared nearly 1,300 points, or 5%, in its biggest percentage gain since March 2009, reclaiming a big chunk of last week's largest weekly decline since the financial crisis.

The Fed's emergency cut — the first since December 2008 — comes two weeks before the central bank's regularly scheduled March monetary policy meeting and after an early Tuesday conference call among G-7 central bankers and finance leaders, which yielded a pledge "to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks" from the coronavirus outbreak.

Despite the spread of the outbreak, Cramer has in recent days argued that an emphasis on rate cuts is misguided. 

Cramer said rate cuts do not address the core challenges brought by the coronavirus. The outbreak is a "biological crisis," he said. 

"If you got something that allowed you to get out of the hospital, if we had a vaccine, anything, then you won't need this rate cut," Cramer said. "The more important thing is that we need people to be able to stay at work."

Small business will feel 'real pain' 

Cramer said he thinks the most appropriate government policy response would be directed toward small and medium-sized businesses. The "Mad Money" host specifically said the Treasury Department could take action. 

"It's incumbent on Treasury to say ... 'we're going to work with small business. If you have a problem, you can come to us.' Because that's where the real pain is going to be," Cramer said 

At least two New York area high schools closed Tuesday following a suspected case of the coronavirus in the community. Cramer said it may start with schools, but it is likely to extend to restaurant and shopping mall closures.  

"Well how about the people who work at these places?" Cramer said. "How about these thinly capitalized companies that are supposed to be pay these people?" 

Cramer said his concern is focused toward "companies that are week to week." He said he's looking for policy that will make sure those companies "will not have to close and therefore laying off people."

"Powell cannot feed your family. You're not going to do better on that interest rate cut," Cramer said. "What you need is a pledge from the government that we will help tie you over until this thing passes because the small and medium size businesses cannot go through this."