The US economy chugged along at a lacklustre pace in recent weeks, according to a Federal Reserve report Wednesday that noted concerns about the impact of new tax hikes on consumer spending. "Economic activity generally expanded at a modest to moderate pace," the Fed's Beige Book said, reporting conditions across the Fed's 12 districts. Ten of the districts characterized economic expansion in those terms, while activity was slower in the Boston and Chicago districts. The report cited government actions, such as the January 1 payroll tax increase and the new health care reform legislation, as weighing on consumer spending -- crucial because it accounts for 70 per cent of economic output. "Most districts reported expansion in consumer spending, although retail sales slowed in several districts," the report said. "Many district contacts commented on the expired payroll tax holiday and the Affordable Care Act as having restrained sales growth." The report showed the troubled jobs market was picking up somewhat, even as high unemployment, hovering around 7.9 per cent, remained the central bank's top concern for the world's largest economy. "Labor market conditions generally improved, although several districts reported restrained hiring." Many districts reported a rise in temporary employees, the report said. "Employers in several districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff."