WASHINGTON, (Reuters) – The amount of Americans filing for unemployment benefits claims remained below levels before the pandemic, but consumer spending increased strongly, putting America on track to a strong end of 2021.

However, price pressures continued to rise with an underlying inflation measure recording the largest increase in annual growth since 1980s. On Thursday, the reports came at a time when the nation was experiencing a rebound in COVID-19 infections, which were driven by Omicron and Delta variants. These infections could seriously impact economic growth for the first quarter.

The Labor Department reported that initial claims for state unemployment benefits remained unchanged at 205,000, a seasonally adjusted figure. This was for the week ending Dec. 18. Initial claims for state unemployment benefits fell to an all-time low of 205,000 in the first week of December, a trend that was not seen since 1969.

Reuters polled economists and predicted that there would be 205,000 new applications in the week to come. From a record 6.149 million claims in the early part of April 2020, claims have fallen.

A typical pattern of increased applications during cold months is to increase, however, an acute shortage in workers has caused a shift in the seasonal pattern and resulted in lower claims figures in recent weeks. The unemployment rate is at its lowest level in 21 months, 4.2%, even after removing weekly volatility.

Lou Crandall from Wrightson ICAP in Jersey City, said that the normal December buildup of layoffs had been less than expected this year. This resulted in historically low claims levels in seasonally adjusted terms.

End of October saw record numbers (11.0 million) job opportunities. Consumer spending is being supported by higher wages due to companies scrambling for workers.

On Thursday, a separate Commerce Department report showed that consumer spending, which account for over two-thirds U.S. economy activity, increased 0.6%. According to revised October data, spending increased 1.4% rather than 1.3%. Reuters polled economists to forecast that consumer spending would rise 0.6%.

Consumer spending rose largely because of services like travel, which was celebrated during Thanksgiving. After Americans began their holiday shopping earlier to prevent empty shelves due to shortages, the outlays for goods was lower.

Consumer spending rose at 2.3% annually in the third quarter. The economy saw an increase of 2.3% over the year. The fourth quarter growth forecasts are at 7.2%. According to a Reuters poll of economists, growth is forecast to be 5.6% for the entire of 2021. This would mark the fastest rate of economic growth since 1984. In 2020, the economy shrank by 3.4%.

The economy’s future outlook is looking bleak. There are high levels of COVID-19 infection and President Joe Biden’s signature domestic investment bill worth $1.75 billion, Build Back better, was shot down by Senator Joe Manchin (moderate Democrat). He said he will not vote for it.

Economists were forced to reduce their estimates of next-year’s growth.

The inflation rate increased even more in November. After a 0.5% increase in October, the personal consumption expenditures price index (PCE), did not include volatile food or energy.

Over the past 12 months, the core PCE price index saw an increase of 4.7%. It was the highest increase since 1980s, and it followed an October 4.2% year-on–year gain.