The latest Consumer Price Index (CPI) and initial jobless claims data both came in hotter than expected, highlighting ongoing inflationary pressures and some weakness in the labor market.

Wilmington Trust chief economist Luke Tilley joins Market Domination to discuss what this data means for the Federal Reserve's rate-cutting path and the outlook for the US economy.

"I think we can start speaking about the soft landing in the past tense, if you will... The PCE (personal consumption expenditures) headline is 2.2%. I mean, that's essentially down to their target. You've got the unemployment rate right at their equilibrium or their expected normal rate, 4.2%," Tilley tells Yahoo Finance. He notes that if the labor market worsens, it may signal that the Federal Reserve's monetary policy was "too restrictive for a little bit too long."

"But I don't see any signs of a reacceleration. And now that we've got a stronger jobs report, we think it supports that base case of the soft landing and might be able to talk about it in the past tense," he adds.

While the initial jobless claims data came in higher than expected, Tilley notes that it could be due to the hurricanes and strikes. Thus, the data should not be weighed too heavily in terms of its impact on the overall health of the labor market.

Tilley concludes that the market tends to overreact to economic data. "There's this constant movement of trying to discern on the margin. You're going to have some investors moving from one camp to the other, from euphoria to fear, or back the other direction. But if you take the broad scope of economic data, it looks like that soft landing."

He notes that the biggest risk ahead is a recession, which he believes is about a 30% chance at this juncture.

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This post was written by Melanie Riehl