There is enough economic data for the Fed to warrant a rate cut, Jim Cramer says

CNBC's Jim Cramer on Thursday insisted that there is enough economic data that warrant the Federal Reserve to "take preemptive action here and cut interest rates."

The comments come a day prior to a speech Fed Chairman Jerome Powell is expected to deliver at an annual meeting of central bankers and economists in Jackson Hole, Wyoming on Friday.

"The economy may be in good shape now, but if we keep getting more and more tariffs it could deteriorate," the "Mad Money" host said. "In that case, the Fed needs to cut rates as insurance, bringing our short-term interest rates closer to the rest of the world's."

In the face of a global economic slowdown, the American consumer remains strong, Cramer said pointing to the low unemployment rate in the country and sales growth at large retailers like Target and Walmart. Still, there's more to the U.S. economy than spending, he added.

Furthermore, Cramer said challenges in Europe, particularly in British, French and German economies, could begin to bleed into the United States. Germany's government bond yields are negative, a situation where issuers of debt are paid to borrow.

"Can we shrug off this worldwide weakness? I wouldn't bet on it if I were the Fed," the host said. "Now we have a global slowdown where the United States seems like the rare exception—the Fed should make sure it stays that way."

While the retail giants are doing well, Cramer noted that troubled department stores are expected to cut a lot of jobs in the coming future. Boeing's 737 Max issues could put a dent in U.S. GDP growth, the host said. Low mortgage rates should boost housing, but homebuilder Toll Brothers revealed that demand for new houses dropped more than 3% in its latest quarter.

Business has also slowed down in lumber, natural gas, autos, rail traffic and freight costs, Cramer said.

"There isn't a commodity I follow that's going up in price, unless you count gold," he said. "Some of that's because the auto market is in rough shape and lots of the stuff goes into cars."

President Donald Trump, who planned a series of new tariffs on Chinese imports to go into effect Sept. 1 and Dec. 15, this week ordered the independent Fed to slash the benchmark interest rate by 100 basis points.

"One reason we're in this position is that the Fed tightened too aggressively late last year," Cramer said. "Given all the pessimism and fear that the president's errant tweets instill, it makes a ton of sense for Jay Powell to give the economy some leeway here."

In July, the Federal Reserve instituted a quarter-point interest rate cut to a target range of 2% to 2.5%. It marked the first interest rate reduction since the financial crisis more than a decade ago.

Investors want to see the central bank change monetary policy to allow for cheaper borrowing and boost business investing.

"You could easily argue that there's enough good here to offset the bad. Honestly, I'm not going disagree with that," Cramer said, "but I've done a ton of work on the trade war itself ... and I think it would be nuts to get your hopes up about a deal any time soon."

WATCH: Cramer explains why the Fed should cut rates

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