Business executives are wary about spending more money at the moment despite data that show economic sentiment has improved since the November election, the leaders of two regional Federal Reserve Banks said in Minneapolis Thursday.

At a meeting of the Economic Club of Minnesota, Loretta Mester, president of the Cleveland Fed, said the optimism that is being displayed in economic surveys isn't spurring investment.

"We haven't seen a sharp increase in activity that you might assume you'd get from that surge in sentiment," she said.

And in a meeting with editors of the Star Tribune, Neel Kashkari, president of the Minneapolis Fed, said the outlook for the state's economy is strong but that he and his colleagues also detected caution among bankers and business owners in recent weeks.

"A lot of the optimism from the election is not translating into activity on the ground," Kashkari said. "We ask this every time we meet with bankers and owners of small and large businesses. They're hopeful that regulations will swing back the other direction. And so we say, 'Great. Are you investing more?' And they say, 'No, we want to wait and see.' "

Their research adds to other evidence of uncertainty among business executives about the direction of the U.S. economy. Last month, an analysis of data from about 200 companies in the S&P 500 found capital spending rose only 1.5 percent during the first quarter — and many of those firms lowered such spending.

In a speech to the Economic Club, Mester struck a hawkish tone on interest rates. She said she believed the U.S. economy had reached maximum employment, one of the two criteria the Fed's Open Market Committee considers in setting interest rates.

The other factor, the level of inflation, is nearing the committee's goal of 2 percent. And Mester said "conditions are in place" for sustaining the 2 percent inflation goal over the next year or two.

The committee in March lifted the federal funds rate by a quarter point to 1 percent and held it steady last month.

"Both decisions are consistent with the gradual upward path of interest rates," Mester said.

Kashkari, who has a vote on the committee this year, has been reticent to lift rates and was the only member of the 10-person committee to vote against the March increase. Kashkari has said he doesn't believe the U.S. has reached full employment and that a plan is needed to unwind the bond and securities purchases the central bank made as an economic boost from 2009-14.

Mester told the Minneapolis audience that she doesn't think the committee needs to raise interest rates at every meeting, but she added its members should "remain very vigilant against falling behind."

"If we delay taking further normalization steps for too long and then find ourselves in a situation where the labor market becomes unsustainably tight, price pressures become excessive, and we have to move up rates steeply, we could risk a recession," she said.

In describing her economic forecast, Mester said she believes the U.S. can only reach a long-run growth rate of 2 percent, which is lower than the 3 percent and greater rates being forecast by Treasury Secretary Steven Mnuchin.

"It's hard for me to imagine we can get back up to the 3- to 3 ½-percent growth ... because of the labor force growth rate being lower and also productivity growth being slow because investment has been low," Mester said.

Star Tribune writer Lee Schafer contributed to this report.