Clashing market forces could lead to a stagnant economy, Cramer says

CNBC’s Jim Cramer on Wednesday said that the clashing forces roiling the market could lead to stagnation, which could then turn into an economic reacceleration that causes stocks to go higher.

“Everybody’s worried about either a brutal recession or rampant inflation,” he said.

“At these levels, many stocks already reflect a recession, so if we merely get a stagnant economy that will then reaccelerate, then stocks could go much higher. But if the Fed disagrees with me and hits us with more than just one last big rate hike … the market will have even more downside,” he said.

The major indices made slight gains on Wednesday, bouncing after the release of the Federal Reserve’s June meeting minutes showed the central bank’s dedication to tamping down inflation. Commodities, which were a major driver of skyrocketing inflation, have come down recently, with the U.S. benchmark West Texas Intermediate crude dropping below $100.

Cramer acknowledged that the future of the market is unclear right now, with some investors dead set in their beliefs that there will be a recession while others believe the Fed will engineer a soft landing.

However, he reminded investors to consider the damage that has already been done to stocks, rather than the pain that could be coming.

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