The economy "remained subdued" over the past two months as concern over war with Iraq restrained consumer and business spending, the Federal Reserve said in its most recent survey of regional economic conditions.

The commentary, known as the "beige book," found few districts reporting any change in conditions from the previous Jan. 15 survey.

"Consumer spending remained weak, on balance, with a few districts noting a little improvement and others indicated a slight deterioration," the survey said. "Business spending was very soft, with little change in capital spending or hiring plans."

Some of the Fed's business contacts expressed concern about the rising costs of energy and insurance, which they are unable to pass along to consumers, the beige book said. The Fed banks reported mixed construction activity, and slow business loan demand. Delinquencies and defaults rose slightly on some household loans, a few districts reported.

"Most districts still described manufacturing activity as weak or lackluster, although half of the reports noted at least some degree of improvement," the report said. The New York Federal Reserve bank said securities industry bonuses "are estimated to be down 20-30 percent from last year's levels, and there is no indication of a pickup in hiring on the horizon."

Some New York Fed district banks tightened credit standards while lenders reported an "upturn in delinquency rates on consumer loans," the Beige Book said.

Fed officials meet again March 18 to decide the direction of interest rates, which they dropped to 1.25 percent in November, the lowest in 41 years.