The Fed said that many of its 12 regions saw slight gains in retail sales and home sales. Auto sales remained flat and farmers struggled with heavy rains.
"The outlook generally was positive for the coming months with expectations of continued modest growth, despite widespread concerns about the possible negative impact of trade-related uncertainty," the Fed report said.
The report, known as the beige book, will be used for discussion at the next Fed meeting on July 30-31 when it is expected to cut its policy rate for the first time in a decade.
That view has strengthened following comments Fed Chairman Jerome Powell made in congressional testimony last week and in a speech on Tuesday in Paris. Powell emphasized Fed concerns over rising uncertainties related to trade tensions and a global slowdown and promised that the central bank "will act as appropriate" to sustain the current expansion, now the longest in U.S. history.
A rate cut would un-do some of the credit tightening that occurred after the Fed raised rates four times last year, hikes that Trump has strongly attacked.
Supporters of a rate can point to the beige book's assessment that despite tight labor markets, inflation has remained at stubbornly low levels below the Fed's target of 2% annual price increases.
The report found that in the period from mid-May through early July, inflation was stable to slightly lower, even though some districts were seeing increased production costs due to higher tariffs and rising labor costs.
The impact of the increases on consumers has been retrained, the Fed report said, because companies have not been able to pass on price increases due to brisk competition.
The report said that farmers in the St. Louis, Minneapolis and Kansas City districts have had to contend with heavy rains and flooding that has delayed planting and ruined crops.
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