WASHINGTON -- The U.S. economy started the year off well with busier factories, higher retail sales, more jobs, and growth in home sales.
The Federal Reserve said Wednesday that all 12 of its banking districts reported some level of growth in January and the first half of February.
The Fed's report "was surprisingly more upbeat than we've seen lately," said Jennifer Lee, an economist at BMO Capital Markets. "The employment picture is certainly brighter."
Overall economic activity increased at a "modest to moderate" pace, the Fed noted. That roughly matches the Fed's assessment of the economy in the final weeks of 2011. And it is slightly better than the "slow to moderate" growth cited for October and mid-November.
The pickup in growth reported by each Fed region corresponds with stronger hiring and declining unemployment over the past three months.
The latest Beige Book, as the Fed report is known, said:
Manufacturing output rose in all districts. Auto manufacturing, steel makers, and other metal producers all reported solid growth.
Hiring rose slightly in many districts; factory employment picked up in six.
Home sales increased in at least half of the districts, a notable improvement from the Fed's January report. Six districts reported rising construction of apartments.
Retail sales rose in seven districts.
At a congressional hearing, Fed Chairman Ben Bernanke said the economy has performed better than the Fed expected. If that continues, the Fed may have to reassess its outlook for a slow recovery, he said. That could prompt the Fed to back off its plan to hold its key interest rate near zero until late 2014.
A spike in inflation could also force the Fed to reconsider that policy. Gasoline prices are rising again. Mr. Bernanke said that will likely push inflation up temporarily while depressing consumers' purchasing power.
"The policy is conditional," Mr. Bernanke said in response to a question. "It is based on what we know now."
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