Federal Reserve officials are reporting concerns over the impact falling oil prices will have on an improving economy, according to the central bank's latest "Beige Book" report.
The economic review, which the Fed releases eight times a year, reflected hopes for better growth but noted several problem areas.
Oil prices were seen as a boon to consumers but a problem for energy companies, with the Dallas Fed reporting that Texas energy firms were projecting hiring freezes and layoffs to accompany a 15 percent to 40 percent decline in demand.
In the Kansas City region, drilling activity and capital expenditures were forecast lower, with some firms reporting difficulty obtaining credit.
At the Atlanta Fed, there were reports of high oil inventory levels across the Gulf Coast.
"Reports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand during the reporting period of mid-November through late December, with most Districts reporting a 'modest' or "moderate" pace of growth," the report stated. "In contrast, the Kansas City District reported only slight growth in December. However, most of their contacts, along with those of several other Districts, expect somewhat faster growth over the coming months."
Aside from the energy sector, the Fed report noted sluggish holiday spending in the New York district, a fear confirmed in Wednesday's retail sales report showing an unexpected 0.9 percent decline for December. Broadly speaking, the report described consumer spending increases as "modest" despite a boost from sharply lower energy prices that have pushed prices at the pump to below $2 a gallon in some areas.