National Bank Financial casts a skeptical eye toward U.S. growth expectations in a recent research note.

NBF points out that the U.S. Is on the verge of facing an inverted yield curve. “The U.S. economy is starting the New Year in unusual fashion with a yield curve hovering near inversion, the first such development in five years,” it notes.

“Given the predictive power of the yield spread at forecasting economic slowdowns, one has to wonder whether the just-released Wall Street Journal survey of economists is not too rosy,” NBF adds.

NBF says that the consensus expects business spending to take over from a softening housing market in 2006 and extend the current string of consecutive quarters of real GDP growth of 3% or more from 10 to 15, a post-WWII record. “In our opinion, this scenario is more likely to be realized against a backdrop of very strong profit growth,” it says. “Unfortunately, an inverted yield curve normally spells trouble for profits.”

“Looking back at data since 1978, we find that operating earnings growth averaged only 3.4% in the year that follows an inversion of the yield spread. This is well below the current consensus forecast calling for a 10.4% rise in profits in 2006,” it observes.