Yolcker Asserts He Now Sees Few Recession Signs: Yolcker Sees Few Recession Signs
Federal Reserve Chairman Paul A. Volcker said yesterday there are few signs of recessionÛÓexcept in areas heavily dependent upon the oil industryÛÓalthough economic growth in recent quarters ÛÏhas been less vigorous than had been generally expected.Û</br></br>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,Û as would normally be the case in the fourth year of an economic expansion.</br></br>ÛÏAs the period of low inflation is prolongedÛÓas we become accustomed to more stable pricesÛÓthe chance of sustaining stability seems to me to improve,Û he con- tinued. "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.Û</br></br>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 ÛÏhave been catapulted into recession-like conditionsÛ by the effects of sharply falling energy prices, he continued.</br></br>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 nationÛªs 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.