The Fed survey, compiled from reports from its 12 regional banks, also said labor markets remain tight around the country. That means employers are having difficulty finding workers to fill job openings, something that economists fear could lead to wage and price inflation down the road.

But "despite faster wage growth for some workers, increases in the prices of final goods and services were limited overall, although the prices of transportation services and some industrial commodities rose noticeably," the Fed said.

The survey, known as the "beige book" for the color of its cover, will be used when Fed policy-makers meet March 21 to review the central bank's stance on interest rates. The beige book was based on information collected before Feb. 29.

Many economists believe the Fed will boost rates again at that meeting in a further effort to slow economic growth to a pace that will keep inflation in check. Four times since June the central bank has raised rates by a total of a full percentage point to 5.75 percent, making borrowing more expensive for millions of consumers and businesses.

Still, economists said those actions have had little impact in cooling the red-hot economy, which grew at a breakneck 6.9 percent annual rate in the last three months of 1999.

Fed Chairman Alan Greenspan on Monday expressed new worries about an overheated economy and sounded a warning that interest rates will be raised if the economy doesn't slow.

The U.S. economy's current expansion became the longest in U.S. history at 107 months in February and this month is celebrating its ninth birthday.

Greenspan, in a speech today to the Independent Community Bankers of America in San Antonio, Texas, cautioned banks to maintain their lending standards in the face of the remarkably strong economy. Even though he did not discuss interest rates or monetary policy, Greenspan's remarks contributed to Wall Street investors' nervousness because they echoed his concerns about Americans' inflated expectations of the economy.

Investors were in more of a buying mood today following major losses on Tuesday. In midafternoon, the Dow Jones blue-chip average was up 70 points while the Nasdaq was down 16.

In its latest snapshot of the economy, the Fed said today: "The majority of districts reported strong growth during the survey period, with the remaining reports pointing to moderate growth or continued high levels of activity."

In the manufacturing sector, most districts reported a pickup in activity in January and February, the Fed said. "The gains were moderate in general although Richmond's report indicated considerable strengthening."

Sales of semiconductors and other high-tech equipment were strong in Dallas and San Francisco, the survey said. Demand for a variety of other manufactured products grew substantially including metal products, electronics and furniture, the survey said. Demand for steel was especially strong, largely for use in the production of cars and other big-ticket manufactured consumer goods.

On the retail front, the Fed found sales were strong in most areas and either met or exceeded merchants' expectations.

Sales of consumer electronics, appliances and home furnishings posted the biggest gains, the survey said. Demand for cars and light trucks was solid with sales matching or surpassing activity reported for the same period a year ago.

Some districts, however, reported sluggish sales of clothing.

Despite rising mortgage rates, residential construction activity and sales of new homes remained strong in many areas. But there were signs of cooling in the Atlanta and Kansas City districts and in several states in the San Francisco district.