Down Arrow Button Icon

This month’s jobs report, headlined by the lowest unemployment rate in a half century, was hailed as a “Goldilocks” report: not so hot the economy will overheat, not so sluggish it presages a recession. Most of the time, that’s the kind of news Wall Street loves to hear.

But central to every Goldilocks fable are the hungry bears returning home. And while the financial markets greeted the jobs report as mostly bullish, the stock rally it inspired was muted, and some economists are spying warning signs deeper in the data. So as bullish as the news was, it was also a bit bearish as well.

Last week, the Labor Department said the unemployment rate fell to 3.5% in September, the lowest since December 1969 and below the 3.7% estimate from economists. Non-farm payrolls grew by 136,000, 9,000 fewer than expected. Some economists say that, because the employment pool grows by 140,000 potential workers each month, any number far short of that figure can be seen as a warning sign. Here’s how to make sense of the data—whether you’re a worker, a job seeker, or an investor.

Job growth and low unemployment are good news, right?

Usually, yes. New jobs are for now keeping pace with the demand for them. That’s good for the labor force, but it’s also encouraging for investors because it means the economy is still clicking along, according to one of the most closely watched metrics. At the same time, it’s not growing so fast the Fed may back off from further interest rate cuts, which Wall Street is betting on in coming months.

For the most part, the financial markets greeted the news with a shrug. The Dow Jones Industrial Average is up since the report came out last Friday, while the 10-year bond yield is largely unchanged.

But we’re a decade into the current economic expansion, and the rate of overall economic growth is slowing and could soon drop below last quarter’s 2% growth. Other indicators suggest a slowdown is imminent, such as a recent Fortune Analytics survey that suggest pessimism on the part of purchasing managers, and worries that manufacturing and service hiring may slow.

When economic growth cycles age long enough, they usually end in one of two ways. Either companies see a recession coming and trim jobs (becoming a kind of self-fulfilling prophecy), or interest rates stay too low for too long, inspiring speculation in business investment or market trading that leads to excess and a much harder landing. Put simply, the latter outcome is what led to the the last recession.

So is the U.S. economy overheating or slowing down?

That’s the trillion-dollar question, and the center of a debate the financial markets have been having in recent weeks. It’s complicated by the uncertainty surrounding U.S.-China trade relations, which have proven devilishly hard to predict. Resolving that trade dispute could lead to further economic growth. An escalated trade war could be a tipping point that sends the U.S. or other economies into recession.

Given such uncertainty, economists and investors have been giving extra-close scrutiny to the September jobs report, connecting its data points with other economic indicators to draw as clear a picture as they can for where the economy, and therefore the health of the financial markets, may be headed.

What exactly is the job and economic data telling us?

As you might guess, there’s no clear consensus on this, but rather a divide in views. Some see warning signs while others expect more economic growth, albeit at a slightly slower pace. It’s a lot like that old optical illusion that could be, depending on how your eyes see it, a duck or a rabbit. Or in this case, a bull or a bear.

A key question is, how long will companies keep hiring? The Labor Department said Wednesday that there were a little more than 7 million jobs open in August. That’s still more than enough to meet the demand of new people entering the U.S. workforce, but it’s 4.4% lower than it was a few months ago. If companies start cutting jobs or delaying hiring, the ratio of jobs to jobseekers could decline. And that may well happen soon. A majority of U.S. CFOs are expecting a recession in the next 12 moths.

“The outlook for labor demand continues to darken,” Nick Bunker, an economist at employment site Indeed.com, wrote after the jobs report, noting that it gives “credence to the argument that the labor market slowdown is driven by employer demand.”

Why aren’t wages growing?

Another question centers on the rate of wage growth. In previous cycles, hourly wages have tended to increase as the labor market grows tighter. That’s not happening this time.

The September jobs report showed average hourly earnings fell one cent an hour to $28.09 an hour, the first month-to-month decline in nearly two years. On a year-over-year basis, wages rose a mere 2.9%, the slowest pace in 14 months. Factoring out inflation, that’s only a 1.2% increase in wages in the past year.

Much of that wage stagnation is happening in higher-paying jobs, however. The overall numbers obscure the rising wages that many restaurant and retail workers are seeing as some places raise the minimum wage. But conversely, that’s raising costs for many businesses.

“Restaurants, leisure, hospitality—that’s where a lot of the jobs have been created,” Ellen Zentner, Morgan Stanley’s chief U.S. economist, said on Bloomberg Radio. “Restaurants have been complaining about having enough workers because when conditions get better the workers go somewhere else to get paid more.”

What does all this mean for manufacturing and services jobs?

One caveat about the employment report is that, as central as it is to economic forecasts, it’s more of a rear-view indicator. Corporate CFOs and hiring managers have a more forward-facing view. And their views are looking more bearish.

The Institute for Supply Management’s Purchasing Managers Index for manufacturers came in at 47.8% in September, its lowest figure since the summer of 2009, and down from 49.1% in August. A PMI below 50% signals a contracting manufacturing sector. A similar ISM index for services companies also slipped to a lower-than-expected 52.6 in September from 56.4 in August.

Add to that a separate survey from IHS Market, which showed new business growth in the U.S. at its lowest level in a decade. “The past two months have seen one of the weakest back-to-back expansions of business activity since 2009, sending a signal of slower GDP growth in the third quarter,” Chris Williamson, IHS Markit’s chief business economist, said in a news release.

All together, the economic data leading up to and inside the latest jobs report paints an uncertain picture that, as it comes into clearer focus, shows an aging economy that’s having a harder and harder time churning out new jobs.

That the current economic cycle will end is certain. The timing depends on what new data shows in coming weeks, as well as how the Fed acts on interest rates and how U.S. and China deal with the brewing trade way. For everyone else, it pays to keep a close watch on events—and to keep a window open for an easy escape once the bears in this fable finally show up.