Initial jobless claims, a leading indicator of unemployment, fell to a 29-month low last week, plunging under 400,000 for the first time since July 2008. 388,000 people sought jobless benefits for the first time last week.

I suppose the fact that it’s Christmas week could have something to do with this, but that didn’t hold in 2008 or 2009. Expectations were around 415,000, so this is far below expectations.

This continues the mix of good and bad economic news coming out in the past several days. On the good side, you have this first-time jobless report, reflecting a steady downward trend. Holiday shopping season boosted retail sales, and manufacturing and production increased. And there’s more good news today: bank loans to businesses are increasing, which is a very good sign, though the gains are slight and reflect more of a bottoming out than a surge in lending. State and local tax revenues rose in the third quarter, and are slowly coming back, though they are also below the peak.

At the same time, the housing market showed signs of a double dip with falling prices and consumer sentiment inexplicably fell. Even inside this report, the number of people still receiving benefits after an initial week of aid increased to 4.13 million, a bigger jump than expected. 8.87 million people claimed unemployment benefits of one type or another in the week ending December 11. While the topline numbers presage job gains, perhaps even significant ones, there are so many “shadow unemployed,” discouraged workers who would come back to the labor force if the job market improved, that the unemployment rate is unlikely to budge in the near future.

I hate to pull out that dreaded word “uncertainty,” but with the housing market, state and local budget shortfalls and the Congressional fight over spending all still unresolved, it’s not yet prudent to say if the economy is due for a rebound in the job market in 2011. But we can be happy for this one data point of good news.

UPDATE: Factory data in the Midwest increased at its highest rate since 1988.