The end of 2011 helped give the world's largest economy a boost although not enough to make a large dent in unemployment.
The U.S. central bank issued its so-called "Beige Book" report Wednesday - an anecdotal look at the overall health of the country's economy.
The Federal Reserve report said the U.S. economy "expanded at a modest to moderate pace" from late November into December, helped by strong retail sales during the traditional Christmas holiday season. It said demand for services also increased.
But the report also found that hiring remained weak and that the housing market, a key component of the U.S. economy, was sluggish.
The U.S. economy had a net gain of 200,000 jobs in December, while the unemployment rate dropped to 8.5 percent - the lowest level since early 2009. But while the economy gained nearly 1.5 million jobs in the first 11 months of 2011, that has not made up for the millions of jobs lost in the recession.
Some information for this report was provided by AP, AFP and Bloomberg.