In the so-called Beige Book, an economic summary named after the color of its cover, the central bank said retail sales increased "slightly" in nine of 12 Fed districts, coming in flat in Boston and Cleveland and "soft" in New York.
District reports on the housing market were mostly positive, with construction levels up and inventories of homes tighter, which pushed prices higher. Demands for loans in most districts grew, although not in Cleveland and Richmond, Va., where districts noted "weakness in loan activity."
The Fed took note that prices had "stabilized in recent months," with wage pressure modest, "except for highly skilled workers in information technology, healthcare, transportation and manufacturing."
Inflation pressure could come from drought conditions, which the report said, "had affected production in some districts."
Overall, the economy was growing, but growth had slowed from the fourth quarter of 2011 through the first half of 2012.
Employment was growing at a "tepid pace," the report added.
On Capitol Hill Tuesday and Wednesday, Fed Chairman Ben Bernanke said economic risks had increased in the second quarter of the year with headwinds coming from the debt crisis in Europe and unresolved budget issues in Washington.