Is the Economy Half Empty or Half Full?
Deflation risks grow dimmer; manufacturing looks up
Well, its good that deflation isn't that likely and we probably aren't slouching towards the kind of stagnation that Japan is still suffering from. However, as Krugman pointed out on his personal webpage when deflation first became a major concern, falling prices and wages aren't what we really have to worry about. Deflation is only a symptom of the disease as it were, the disease being the "liquidity trap", where any increase in the money supply is hoarded, not borrowed and spent and so has no stimulative effect. So, just because the risk of deflation is diminished, we aren't out of the woods. Also, as the article warns:

But economists say the data do not erase concerns that the economy, and the job market in particular, will remain weak for months.

There would probably have to be a pretty strong recovery to reduce unemployment, because the economy would have to grow fairly quickly in order to create jobs for the unemployed, new workers and those displaced by rising producivity.