Economic conditions are weakening across much of the United States at the same time food, fuel and raw material prices are increasing, the Federal Reserve said.
In its anecdotal Beige Book summary of regional economic conditions, the Fed said manufacturers reported widespread increases in raw material prices and planned to raise selling prices to recover those costs.
"In particular, price increases were consistently reported for food products, fuel and energy products, and many raw materials," the U.S. central bank said.
"More specifically, increases in the price of chemicals, metals, plastics and other petroleum-based products were commonly cited," In a further sign that inflation pressures could be building, the Fed said that despite generally weaker labor markets, there were some reports of wage pressures and continuing shortages of skilled workers.
There were few bright spots in the Fed's summary of economic activity between March 5 and April 7, when the current report by the New York Fed was compiled.
It did say tourism was up in several districts, as foreigners took advantage of dollar weakness to save on U.S. vacations.
Housing markets and home construction remained sluggish throughout most of the country, but the Fed said there were "few signs of any quickening in the pace of deterioration."
Consumers were clearly under pressure.
The Fed said spending at retailers was softening across the country and that new-car sales were flat or declining in most districts.
Banks said that consumer loan demand was weakening but that lending standards were becoming stiffer and asset quality was deteriorating.
The nation's housing markets have been under severe stress since a meltdown last August in subprime mortgage markets, and the Fed report indicated that was continuing.
Many Fed banks said home prices were being pushed downward, including in Boston, New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, Kansas City and San Francisco.
The Fed surveys dozens of businesses and banks in each of its 12 districts at about six-week intervals to compile the Beige Book.
Some of the anecdotal findings offer particular insight into conditions in individual regions.
For example, the Chicago Fed reported that while service companies, such as small trucking companies, were being driven out of business by soaring diesel fuel prices, some manufacturers said they could not sell their products for enough to recover costs.
"A contact in the construction industry reported that wallboard prices had declined to the degree that they no longer covered production costs," the Chicago Fed said, a reflection of the building downturn.
In Dallas, there were shortages of skilled workers and labor markets were described as "tight" but it was not solely because of economic conditions.
"Some contacts say tighter enforcement of immigration laws has led to scattered farm labor shortages, notably for harvesting vegetables and fruit," the Dallas Fed said.