The Fed's economic snapshot, called the Beige Book, showed business activity "has continued to expand since the last report [in early April], though at a somewhat diminished pace" in the New York region. It encompasses New York State, Puerto Rico, the U.S. Virgin Islands and portions of New Jersey and Connecticut.
Fed economists said consumer purchases, including of new homes, were stable in the region compared with earlier in the year. Tourism was up and then down. And there was less demand for consumer loans.
Economists said Long Island's housing market was stable, "though conditions have weakened in the Hamptons, where sales activity is off, especially at the high end."
Local office vacancies fell in the past two months while rents were either stable or up slightly, the economists said.
The New York region was among four of the Fed's 12 regions that experienced a slowdown in economic growth from April 5 through May 27. The other three regions were Philadelphia, Atlanta and Chicago.
Economists blamed this "deceleration" on gasoline prices' keeping consumers from opening their wallets frequently and on less factory output because supplies were disrupted by the March 11 Japanese earthquake and tsunami.
Three previous Beige Books, covering Nov. 20, 2010, through April 4, were more bullish.
"Many businesses remain cautiously optimistic that growth will rebound in the coming months," said Ryan Wang of HSBC Securities USA.
Separately Wednesday, a poll of New York State residents suggested many are delaying purchases of homes and other big-ticket items because of high costs for gasoline and food.
The Siena College Research Institute found fewer people statewide expected to make a major purchase in the next six months compared to 2010. The biggest year-over-year decline was for major home improvements, where only 14.2 percent expect to spend, down from 17.8 percent in May 2010.
The poll of 804 residents has a margin of error of plus or minus 3.5 percentage points.
Among metropolitan area residents there is growing concern about prices.
Seventy-one percent of people living on Long Island, in New York City and its northern suburbs said their finances were either very seriously or somewhat seriously impacted by food prices last month. That's an increase of 2 percentage points from April.
Those feeling the pinch of soaring gasoline prices fell three points to 62 percent.
Pollster Douglas Lonnstrom said higher costs, declining home values, anemic hiring and other issues have made consumers "worried."
Area residents were less confident last month about their current economic condition than in the April survey. However, they were more optimistic about the future.
Percentage saying last month they intended to buy in the next six months:
Buying and Change
Car or truck purchase 11.2% down 0.5%
Computer purchase 14.4% down 1.9%
Furniture purchase 17.8% down 0.9%
Home purchase 3.2% down 1.5%
Major home improvement 14.2%,down 3.6%
Source: Siena College Research Institute