the bag should bounce rather than compress, i think (so the bottom should also move vertically)
the arm(s) should swing as he walks
the walk cycle itself is a bit unnatural, when we walk we propel ourselves forward by pushing off the ground. this character is setting his feet down flatly, then picking one up as the other lands and carrying it in a circle. i'd search for other walk animations here and at pixelation to study, the advice in them is probably equally useful to your own piece.