Market turmoil weighs on nation's businesses as recovery stays slow

The Fed noted that consumer spending, which accounts for most of the nation's economy, was up slightly in most of the 12 Fed districts, but that non-auto retail sales were flat or down in several areas. And tourism remained solid in most areas, despite a recent run of rough weather.

On the labor front, most districts said they were seeing modest job growth, especially in the healthcare industry. But even with the unemployment rate above 9 percent, businesses were still reporting difficulties with finding skilled workers like engineers, mechanics and software developers.

The Fed reported demand for services was "generally positive" nationwide, while manufacturing was slowing in many districts.

As it has since the recession began, the housing sector remained weak, but several areas noted slight upticks in commercial real estate and construction activity. Loan demand held steady at low levels.

Hurricane Irene took its toll on regions along the East Coast. New York City businesses reported the hurricane disrupted temporarily what had been a strong summer tourist season, and threw a wrench in retail sales. The hurricane also caused "extensive damage" to field crops in North Carolina, while drought conditions hurt crops and livestock in the Midwest.