The Beige Book found that consumer spending had increased in recent weeks in most districts, with automobiles dominating sales growth. Manufacturing continued to improve in all districts, with growth occurring across many sub-sectors, the Fed said.
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Not only were labor market conditions improving in all districts, employers in several districts were finding it difficult to find skilled workers, it said. While that had pushed up compensation in those areas, overall wage pressures remained contained.
During semi-annual congressional testimony on Tuesday and Wednesday, Federal Reserve Chair Janet Yellen said that she was "optimistic" on the slowly growing economy but that the Fed's job is not finished and it must provide "a great deal of accommodation."
On Wednesday, she said that continued low interest rates could create asset bubbles in certain pockets, such as the biotechnology and social media sectors that the Fed had called "substantially stretched" in Tuesday's report.
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—By CNBC.com. Reuters contributed to this report.