Fed Beige Book says economic activity weakened

WASHINGTON (Reuters) - Economic activity has weakened across the United States since early October, while price pressures have eased with declines in retail and energy prices, the Federal Reserve said on Wednesday.

The Fed's Beige Book summary portrayed declining conditions in most areas of the economy.

Labor markets weakened as firms in many districts reported accelerating layoffs. Wage pressures were largely subdued, the Fed said.

Consumer spending slumped, with retail sales decreasing and vehicle sales falling off sharply in most regions of the country.

The report was based on data collected before November 24.

Earlier this week, a panel of experts formally declared the U.S. economy in recession since December 2007. The Fed is expected to its lower benchmark interest rate target by a half-percentage point to 0.5 percent at its next scheduled policy meeting December 15-16.

Some analysts expect the Fed could bring rates down to zero by its following meeting at the end of January as it seeks reverse the economic contraction linked to the collapse of housing markets and a jump in home loan defaults.

Adding to the gloomy picture, the Beige Book described weak housing markets characterized by reduced selling prices in many regions. Sales were down in most districts, the Fed said.

Credit conditions remained tight and business and consumer lending activity slowed in most districts, the U.S. central bank said.

Manufacturing activity had declined "noticeably" since the last Beige Book in October, the Fed said.

"All twelve districts reported weaker manufacturing conditions, to varying extents," the Fed said.

(Reporting by Mark Felsenthal, Editing by Neil Stempleman)