U.S. Economy Is Heating Up, Fed Report Says

The Federal Reserve Board, which has vowed to keep the economy from overheating and risking higher inflation, said Wednesday that the pace of activity picked up in recent weeks.

In a report, the Fed said the economy gained momentum, especially from consumer spending and manufacturing output, in December and early January, compared to the prior six weeks.

“It would appear . . . that the national economy gained momentum in recent weeks as consumer spending strengthened, manufacturing activity continued to rise and producers scheduled more investment in plant and equipment,” the Fed said in a periodic report on the economy called the “tan book” by Fed watchers on Wall Street.

In 11 of 12 Federal Reserve districts around the country, retail sales in December met or exceeded retailers’ expectations, the report said. Three districts said the moderate-to-strong pace of sales continued through early January.

In manufacturing, “several industries were reported to be operating at high capacity utilization rates, but only a few, such as chemicals, claimed capacity limits had constrained production,” the Fed said.