The Chicago purchasing managers index (PMI) for the Mid-West region showed business optimism touched a 13-year high in February, while the new orders component was the highest since December 1983.
The release came as New York Federal chief Bill Dudley said the outlook was "considerably brighter than six months ago" with signs of "broadening and strengthening" across the board.
Mr Dudley said it would be foolish for the Fed to "over-react" to the commodity spike, blaming it on "temporary" factors that are unlikely to set off an inflation spiral when there is still so much slack in the US economy.
The latest jump in food prices is largely due to bad weather, while the rising cost of oil costs is double-edged since it acts as a tax on disposable income. "The pass-through of commodity prices into core measures of inflation has been very low in the US for several decades."
However, the PMI survey responses suggest that the Fed may have misjudged the level of spare capacity, lowering its guard against inflation risks.
Among the sample comments are: "Costs continue to escalate", "Steel prices are increasing weekly", "My vendors have created such low inventory that now that business is picking up they cannot meet my demand"; "Hiring is now above pre-layoff levels, targeted to rock stars who make much, much more than previously eliminated managers"; or simply, "too many 'fricken' speculators in market causing higher prices".
The detail will be seized on by inflation hawks who think the safe "speed limit" for the US economy is lower than claimed, and that the Fed erred by launching a second blitz of quantitative easing in October.
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