Fed: Economy still growing, but Washington a source of concern

On the healthcare front, officials in Boston reported that the need for healthcare consulting was on the rise thanks to the Affordable Care Act, while some healthcare firms in San Francisco said they planned to freeze hiring or cut back on spending plans as they faced federal spending cuts.

Elsewhere, the expiration of the payroll tax cut was cited as a factor in holding back sales growth.

While most businesses remain optimistic about the trajectory of the economy, the Fed found lingering uncertainty, primarily due to "fiscal policy and health care reform."

Despite the challenges posed by Washington, the Fed found businesses to be generally rosy on the economy. Most district reported upticks in manufacturing, consumer spending, and travel and tourism. The job market remained steady or slightly improved in most areas, and home prices were on the rise.