(04-16) 13:36 PDT WASHINGTON (AP) —

The country’s economic health deteriorated further in early spring as shoppers buckled under the strains of the housing and credit debacles and a weaker employment climate.

Manufacturers and others businesses, meanwhile, were walloped by zooming prices for energy and other raw materials. However, their ability to jack up retail prices to customers was mixed, with some companies restrained by competitive pressures, according to the Federal Reserve’s new snapshot of nationwide economic conditions released Wednesday.

“Economic conditions have weakened,” the Fed report stated.

Many analysts believe the economy has fallen into a recession, predicting that economic activity contracted in the first three months of this year and is still ebbing. Even Fed Chairman Ben Bernanke recently acknowledged for the first time that a recession was possible. That was a rare utterance of the “r” word for a Fed chief. The government later this month will report on the economy’s first-quarter performance.

Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in a speech Wednesday that the economy “has all but stalled and could even contract over the first half of the year.”

On Wall Street, investors Д buoyed by upbeat earnings reports from JPMorgan Chase, Intel Corp. and Coca-Cola Co. Д looked past the downbeat economic news. The Dow Jones industrials jumped 256.80 points.

The Fed report underscored the challenges facing Bernanke and his colleagues as they fight to keep the economy from sinking into a deep recession, while at the same time avoiding a flare-up of inflation. The report will figure prominently when the Fed meets April 29-30 to decide its next move on interest rates.

The Fed, which has been cutting rates since September to bolster the economy, turned much more forceful in January, when conditions took another turn for the worse. Many economists believe the Fed will lower rates yet again at the April meeting to help shore things up.

The Fed snapshot “either portrayed a slowdown in already subpar economic growth or a deepening recession,” said Michael Gregory, economist at BMO Capital Markets, who predicted a quarter-point rate reduction.

Even with the rate reductions, though, consumers have turned more cautious, the Fed report suggested. Consumers are major shapers of the economy because their spending accounts for such a big chunk of overall economic activity.

“Consumer spending was characterized as softening across most of the country, with some districts reporting year-over-year declines in retail and or auto sales,” the Fed report said. Merchants Д other than auto dealers Д reported sales were “sluggish or declining” in 10 of the Fed’s 12 regions, the report said. With inventories of unsold goods starting to pile up, retailers in the Richmond, Va., and San Francisco regions have canceled orders, the report noted.

Lofty energy prices are squeezing businesses’ profits and pinching consumers, leaving them with less money to spend on other things. That is putting a damper on economic growth and adding to inflation pressures.

Oil prices briefly topped $115 a barrel for the first time Wednesday. Gasoline prices have soared, too, marching toward $4 a gallon.

Businesses must cope with higher prices for food, fuel and energy products and many raw materials, the Fed report said.

“Most manufacturers have or are planning to increase prices” in response to such rising costs, the Fed said. However, the response of companies in the service sector has been more mixed, the Fed said, “in part due to differences in competitive pressures.”

Overall, most of the Fed’s regions reported “little change in retail price inflation,” the Fed report said, suggesting that producers Д and their profits Д are getting hit by rising energy and raw material prices.

The government reported Wednesday that consumer prices went up by a relatively modest 0.3 percent in March. Producer, or wholesale, prices, meanwhile rose a lot faster Д by a whopping 1.1 percent.

On the manufacturing front, activity varied across the country.

The Fed regions of Chicago, Boston and Richmond, for instance, reported factory activity was rising Д but not substantially. But the regions of New York, Kansas City, Philadelphia and Dallas all reported weakening factory production. The regions of St. Louis and Cleveland saw activity hold steady, while the regions of Atlanta, Minneapolis and San Francisco said it was mixed.

Nonetheless, most Fed regions saw a “continued slide” in demand for goods related to housing construction, the Fed said. Uncertainty about economic conditions, the Fed added, is leading to a “generally subdued” outlook for manufacturers.

In a separate report Wednesday, the Fed said big industry production nationwide rose 0.3 percent in March, an improvement from a drop of 0.7 percent in February.

The housing market remained stuck in a rut.

Home building stayed sluggish throughout the nation, although “there were few signs of any quickening in the pace of deterioration,” the Fed said. Declines or downward pressure on home prices were reported in many Fed regions. And the regions of New York and San Francisco noted “some incipient price declines in areas that had previously shown resilience.’

The Commerce Department, in yet another report Wednesday, said home building sank in March to its lowest point in 17 years, fresh evidence of the depth of the housing market’s woes.

The Fed’s survey is based on information supplied by the Fed’s 12 regional banks. The information was collected before April 7.

(04-16) 04:00 PDT New York - —

United Airlines boosted ticket prices for the second time in a week on Wednesday, the same day that oil prices topped $115 a barrel for the first time.

Travelers on some flights, such as Chicago to Minneapolis, who were paying a surcharge of $50 per round trip will now see that charge increase to $70, United spokeswoman Robin Urbanski said.

Fliers in markets where United previously did not apply a surcharge - mostly where the carrier competes head-to-head with low-cost carriers - will now be charged an additional $10 per round trip.

United last week raised fares by $4 to $30 per round trip, citing record fuel costs. Other carriers matched that increase. No major airlines immediately matched United’s latest increase across their route networks.

The surge in fuel prices has left airlines scrambling to find ways to boost revenue by charging extra, not just for drinks and food, but also for baggage and added legroom.

US Airways says it will begin charging passengers extra for an aisle or window seat on some of its planes.

President Scott Kirby told employees Wednesday in a letter that the carrier needs to find ways to offset high fuel costs that are plaguing the industry.

The new Choice Seats program, which begins May 7, will charge passengers $5 per flight for an aisle or window seat in the first several rows in coach.

Sims games have been a real success

When the Sims first appeared in 2000, there were a fair amount of wisecracks.

“We had a lot of mocking,” said Rod Humble, head of Electronic Arts’ Sims studio. ” ‘Why have a game where I can put myself in it? That’s stupid,’ people said. I think history proved it was a good idea.”

You might say that. EA is reporting that the Sims line, with its sequel and expansion packs, has sold 100 million games, making it the most popular PC franchise ever. The series, which puts players into a world that they can create and manipulate, has been wildly popular, especially with women. The core audience is about 60 percent male.

Created by gamemaker Will Wright, Sims was a stretch of the imagination, even for Wright’s developers, who initially were skeptical. But the game succeeded by giving people the freedom to re-create themselves, their families and their homes, and by setting them loose to participate in all manner of activities.

The game introduced or popularized many concepts we take for granted today. Casual gaming and user-generated content, which are extremely hot right now, were introduced to many people through the Sims. There are now more than 100,000 Sims movies created by users, which reflects the way players have embraced the creative tools and open-world possibilities of the Sims, said Nancy Smith, president of EA’s Sims division.

“There is not a set, established path,” Smith said. “The players figure out what their own goals and aspirations are. Our players are able to enjoy the game in so many different ways.”

So what’s next for the Sims? The team is preparing Sims 3, a sequel expected out next year that should appeal to serious gamers, Humble said. The studio also is collaborating with Twentieth Century Fox on a live-action movie. And there’s a Sims Carnival casual game in the works that allows players to create new games. Expect the Sims to be with us for a while.