Federal Reserve Chairman Paul A. Volcker said yesterday there are few signs of recession -- except in areas heavily dependent upon the oil industry -- although economic growth in recent quarters "has been less vigorous than had been generally expected."

Volcker said in a speech at Washington University in St. Louis that, with oil and other energy prices falling, "Concerns about a resurgence of inflation seem to be receding, rather than the opposite," as would normally be the case in the fourth year of an economic expansion.

"As the period of low inflation is prolonged -- as we become accustomed to more stable prices -- the chance of sustaining stability seems to me to improve," he continued. "In that context, the prospects for extending the expansion also have been enhanced, on balance, by recent developments in the world financial and energy markets and on the federal budgetary front."

The Fed chairman cited gains in employment, housing investment and consumer spending as positive developments. At the same time, there are problems in business investment and farming, and some parts of the country "have been catapulted into recession-like conditions" by the effects of sharply falling energy prices, he continued.

A text of the generally upbeat speech was made available in Washington.

Volcker also said that the economy would be aided by the 30 percent decline in the value of the dollar on foreign exchange markets in the past year, which should help reduce the nation's trade deficit and create a market for more U.S.-made goods. A lower trade deficit also would reduce the need to borrow capital from abroad to finance it, Volcker said.

But even with the fall of the dollar, other industrial nations need to do more to stimulate their economies and to increase markets for U.S. exports, the Fed chairman continued.

"The case for greater domestically led expansion seems particularly strong in Japan, given its enormous trade surpluses and high level of domestic saving," he said.

Many financial-market participants expect the Federal Reserve and the Japanese central bank to cut their discount rates soon, perhaps in a coordinated fashion as they did in March. The discount rate -- 7 percent in the United States and 4 percent in Japan -- is the interest a central bank charges when it lends reserves -- cash -- directly to financial institutions.