Fed: Recovery Spreads but Doesn't Spur Hiring

The economic recovery is spreading to more parts of the country but has yet to spur companies to ramp up hiring.

A new Federal Reserve survey, released Wednesday, underscores the duality of the economic turnaround: even as the economy grows and the recovery extends its reach geographically, more than 15 million people remain unemployed.

The Fed observed that although "economic activity remains at a low level, conditions have improved modestly further." However, the Fed also noted that "labor market conditions remained soft" in most of the Fed's 12 regions as the new year started.

In a disappointing news last week, the government reported that companies chopped 85,000 jobs in December. The unemployment rate held steady at 10 percent only because more than a half-million people abandoned their job searches and left the work force. If they didn't drop out, the unemployment rate would have jumped to 10.4 percent, analysts say.

The Fed's survey painted a picture of an economy that is growing at a modest — not explosive — pace. To drive down the unemployment rate, however, the economy needs to grow robustly.

Ten of the Fed's 12 regions did report some "increased activity or improvement in conditions," while the remaining two — Philadelphia and Richmond — described economic conditions as mixed.

In the Fed's previous survey issued in early December, eight regions said activity increased or conditions improved, while four said conditions were little changed or mixed.