CNBC's Jim Cramer said Thursday that the economic response by the Federal Reserve and the Trump administration to the coronavirus pandemic has been critical to the recovery of U.S. jobs and the financial markets.
"They threw a lot at the economy in order to make it work, and I think you could argue from that employment number, it is working," Cramer said on "Squawk on the Street," referencing the record 4.8 million nonfarm jobs added in June.
"I don't think the stock market is lying here. I do think there is a level of speculation, but there also are a lot of companies that would've gone out of business that didn't," Cramer added.
U.S. stock indexes were rattled by the advent of the new coronavirus, falling rapidly from their February records highs into bear market territory, defined as more than 20% off a recent peak. But since its late March bottom, the S&P 500 has risen more than 40%, as of Wednesday's close.
The "Mad Money" host specifically referenced the swift and wide-ranging emergency action from the Fed, saying that Chairman Jerome Powell "deserves a lot of credit" for helping keep the corporate bond market functioning when it "could have gone very bad."
Cramer also complimented Treasury Secretary Steven Mnuchin, especially for working across the aisle with Democrats. Collectively, the Fed and the Treasury learned lessons from the 2008 financial crisis and this time responded aggressively, Cramer contended.
"How did the cruise lines survive? How did the airlines survive? And the answer is Secretary Mnuchin and the Federal Reserve decided they weren't going to fail," Cramer said. "You could argue that the banks should have already had their dividends cut, but there was so much money being pumped in that they seem safe. The Fed and Treasury decided not to let this become a depression."
Cramer stressed that there is still a lot of pain and uncertainty in the economy, particularly for small- and medium-sized businesses. Despite the June jobs gain, the U.S. unemployment rate remains at 11.1%. Additionally, a resurgence of Covid-19 cases across Southern and Western states has prompted governors to pause or rollback, some of the economic reopening efforts that helped bring people back to work.
Cramer also said the large-scale fiscal relief measures included as part of the March $2.2 trillion CARES Act — such as the direct stimulus checks for Americans and the enhanced unemployment benefits — have also been integral in driving the recovery.
The House on Wednesday passed a bill to extend the deadline to apply for forgivable small business aid through a key coronavirus relief program. The legislation, which the Senate approved Tuesday, extends the deadline to request Paycheck Protection Program loans to Aug. 8 from June 30. The measure heads to President Donald Trump for his signature.
With Democrats on Capitol Hill pushing for a new round of coronavirus stimulus, Trump said Wednesday that he supports another round of direct payments to Americans, claiming he wants to give out more money than Democrats have already proposed. The president did not, however, seem keen on continuing enhanced unemployment benefits; the $600-per-week federal payments on top of what states offer expires at the end of the month.
"There's stimulus all over the place. The economy is on steroids," Cramer said. "Now, can you take the economy off steroids once it starts getting momentum?"
Ultimately, Cramer said that is going to depend on the trajectory of the coronavirus in states such as Texas, Florida and California, where cases are going up and up. "If you start seeing a lot of closures, I think that it will dampen the momentum," he concluded.