Economic conditions across the U.S. "slowed somewhat," according to the Fed's Beige Book on Wednesday. Five of the 12 districts were said to have weakened since the last report six weeks ago, while Chicago's economy was "sluggish" and growth in Kansas City had moderated. The remaining three districts saw slight increases in activity.

Nearly all districts reported sluggish or slowing consumer spending, although tax rebate checks boosted sales for some items.

All districts characterized overall price pressures as elevated, particularly for fuel, other petroleum-based materials, metals, food and chemicals. Retail price inflation was mixed, with some districts reporting increases but others noting some stability.

Wage pressures were "generally limited" in most areas, as labour market demand was soft, except for highly-skilled workers and in the energy sector.

Most districts saw a further tightening of credit, and loan growth was generally restrained across the country.

Residential real estate markets "remained sluggish in a majority of districts," the report said, with residential real estate lending and consumer lending showing more weakness than commercial lending.

Demand for nonfinancial services was mixed, with strength in the IT and health care industries offsetting some weakness in other service sectors. "San Francisco noted 'grim' conditions for real estate services such as title insurance, and some service firms in the New York District expressed caution about hiring due to ongoing turmoil in the financial industry," the report said.

Manufacturing "declined or remained weak in most districts." Going forward, most manufacturers expected stable capital spending, but a few noted manufacturers' plans to reevaluate based on current economic conditions.

The Beige Book is a summary of economic news over roughly the past six weeks in the 12 Federal Reserve Bank districts. The Federal Open Market Committee and analysts look to the compilation of comments by regional Fed banks to get a non-numerical picture of economic conditions across the country.

The last Beige Book, released on June 11, reported that economic conditions across the United States were "generally weak" in April and May, yet many economists called the report better-than-anticipated, as only seven of the 12 districts described conditions as "sluggish" or "soft," compared to nine in the previous report. The remaining five described conditions as "stable" or "little changed."

By Patrick McGee and edited by Sarah Sussman