Housing markets showed more strength in nearly all parts of the country. Manufacturing dipped in the Philadelphia district, but grew modestly in most regions after struggling through 2012. And many districts reported improvement in individual jobs markets.
The report, called the Beige Book, provides anecdotal information on economic conditions through Feb. 22. The information will be used as the basis for the Fed's policy discussion at the March 19-20 meeting.
Analysts said the report was slightly more upbeat than the previous Fed survey, noting the modest rebound in manufacturing in the last two months.
Many economists say Fed officials will maintain their low-interest rate policies but take no new steps at the March meeting.
In January, the Fed stood behind aggressive steps it launched in December to try to reduce unemployment. It repeated that it would keep its key short-term interest rate at a record low at least until unemployment falls below 6.5 percent. And the Fed said it would keep buying Treasurys and mortgage bonds to help lower borrowing costs and encourage spending.
The unemployment rate was 7.9 percent in January when the Fed last met.
The economy has shown improvement since then, even as Americans paid higher taxes and automatic government spending cuts loomed. On Jan. 1, nearly all Americans who draw a paycheck began paying higher Social Security taxes, and income taxes rose for the highest earning workers.
The tax increases and broader budget debate in Washington have not slowed financial markets.
The Dow Jones industrial average closed Tuesday at a record high and rose again Wednesday. The index of 30 big corporations has more than doubled since hitting a low during the financial crisis in March 2009.
Consumer confidence rose in February from January, according to surveys by both the Conference Board and the University of Michigan. Factories and service companies both grew at the fastest pace in at least a year.