Jim Cramer is shaking with fear over what American Standard's ( ASD) earnings miss and lowered guidance mean for the economy, he said on his "RealMoney" radio show Tuesday.

American Standard, which makes air-conditioning systems and fixtures for homes, reported particularly poor results in its kitchen and bath segment, said Cramer. That signals bad news for the economy, he said, because it means housing construction and remodeling, which have been keys to the economy and strong for a long time, are weakening.

American Standard CEO Fred Poses said the consumer is finally feeling pinched by higher interest rates and high gas prices, and Cramer said he believes him.

Cramer said the Federal Reserve must stop raising interest rates. If they don't, he is going to turn incredibly bearish.

Other stocks down in sympathy with American Standard are Masco ( MAS), Fortune Brands ( FO), Lowe's ( LOW), Home Depot ( HD), Toll Brothers ( TOL)and Lennar ( LEN), said Cramer.

It wasn't all bad news, though, Tuesday. Cramer said Johnson & Johnson ( JNJ), 3M ( MMM), United Technologies ( UTX), Merrill Lynch ( MER), Wachovia ( WB) and Genzyme ( GENZ) all reported good quarterly results. But if the Fed doesn't soon stop raising interest rates, it won't matter, he said: The average stock will get hurt.

Commenting on oil stocks, Cramer said they are in a precarious position. Cramer said that a block of 25 million shares of Exxon Mobil ( XOM) traded today at a $1.80 discount to the market price, but XOM's stock is now trading below that discounted price.

He added that people are selling energy stocks because they believe the economy is weak, which will curb demand for oil.

In response to a question about BioCryst Pharmaceuticals ( BCRX), a stock Cramer recommended last week for a trade, Cramer said it is time to ring the register. He is no longer interested in the stock.

Of Abercrombie & Fitch ( ANF), Cramer said his expert on the stock, Prudential analyst Stacey Pak, believes that ANF is a buy here, and Cramer is going to go with that.

Cramer said he would not want to own the stock of Petroleum Development ( PETDE) in part because of accounting issues.

A caller wanted to know if BP Prudhoe Bay Royalty Trust ( BPT) might find itself in a similar situation to Fording Canadian Coal Trust ( FDG), which could be adversely affected by changes in proposed Canadian tax laws. Cramer said he did not believe that BPT would be affected by the changes as proposed.

Cramer said National-Oilwell Varco ( NOV) is an oil stock he still likes. We still need to build more oil rigs and repair the damage in the Gulf, he said.

Cramer would sell Valero ( VLO). He believes that the stock is headed below $100. Valero traded at $100.97 late Tuesday.

At $31.80 late Tuesday, Chesapeake Energy ( CHK) does not offer a good risk/reward, said Cramer. If the winter is mild, Cramer believes that the stock will go to the mid $20s. If the winter is cold, the stock will go to $40, he said. But that's not enticing enough for him.

Cramer believes that Halliburton ( HAL) is headed to $55 from $59.22 late Tuesday.

If one didn't own any oil or gas stocks, Cramer would start with Exxon. At $56.72 Tuesday, Exxon's price is "nutty," he said. Although it's not his favorite, it's not doing that badly, he said, adding that the company could afford to buy back stock and boost its dividend to support the stock price.

In response to a caller's question about whether one should buy more Dresser-Rand Group ( DRC), Cramer said he would wait until the stock got to $20 to buy more. DRC traded at $21.48 late Tuesday.

Cramer said Burlington Resources ( BR) was not attractive from a risk/reward standpoint. He believes that at Tuesday's price of $67, the risk/reward is $5 down and $8 up. He would prefer $2 down and $10 up. If the winter is not cold, Burlington will go to $62, he said.

Cramer said people are panicking in stocks such as Occidental Petroleum ( OXY). He would buy select oil stocks that are down 20% or more from their highs.

Otherwise, Cramer likes health care cost containment and defensive stocks such as Amgen ( AMGN) and Genzyme ( GENZ).

At the time of publication, Cramer was long Fording Canadian Coal Trust, Halliburton and Occidental Petroleum.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict."

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