The number of people filing initial unemployment claims fell last week to just above 200,000, the lowest level since October. That data point revealed a slightly stronger job market than expected.

Of course, weekly stats have a tendency to jump around, and they can be especially noisy this time of year. But it was the second piece of economic data we got Thursday that surprised on the upside. Retail sales in November also overshot expectations. And unemployment unexpectedly dropped last month, according to Friday’s jobs report.

It sounds positive, but can we call these trends “good news”? That’s a little harder to say.

In an economy whose biggest concern is inflation, things that sound like good news — high job openings, low unemployment and rising wages, for instance — turn into bad news, said Gregory Daco, chief economist at EY.

“Excessively strong labor market data is a sign that there may be further inflationary pressures in the pipeline,” he said.

Which means the Federal Reserve could keep interest rates high to slow the economy and “soften the labor market,” said Claudia Sahm, a former Federal Reserve economist.

“Well, that’s a euphemism for people not getting as big paychecks, and some people probably not getting paychecks at all,” she said.

But the Fed’s tone is shifting, she said. Now good news for the labor market could be pointing to a “soft landing” — that elusive scenario in which inflation comes down without a recession.

“It’s starting to really look like we’re in a balanced place,” Sahm said.

There are now about 1.3 open jobs for every unemployed worker, down from a high of 2 last year. Labor shortages have eased and productivity has jumped, said Gene Goldman at Cetera Financial Group.

“Productivity surging is huge because this puts downward pressure on average hourly earnings, and it just shows that we’re producing more and the economy is humming along,” he said.

Inflation has declined, but it’s still above the 2% annual rate the Fed is aiming for, so EY’s Daco isn’t ready to see the economy through rose-tinted noninflationary glasses.

“You don’t know until you’re past the soft landing and you’re at the gate,” he said. “We’re not there yet.”

So all this news might not be bad or good. It’s still just kinda news.

Stories You Might Like

Unemployment claims hit another pandemic low

Ahead of Fed’s September meeting, some key data on unemployment and inflation

Unemployment claims still above 700,000

New unemployment claims have spiked – but don’t panic

Play Fed bingo during the Jackson Hole Economic Symposium

Unemployment claims tick back up yet again