It's Roubini Friday!

Nouriel Roubini's forecasts of imminent recession look better and better:

Manufacturing May Be Slowing, Fueling Forecasts for Fed Rate Cuts - WSJ.com: By CHRISTOPHER CONKEY: December 2, 2006: Fresh data suggest the manufacturing sector is beginning to contract.... The Institute for Supply Management, an Arizona-based group of corporate purchasing managers, Friday said its index of manufacturing activity slid to 49.5 in November from 51.2 in October. Readings below 50 indicate contraction, and the decline ended a 41-month expansion among manufacturers.

"November was a defining month," said Norbert Ore, who oversees the survey and also serves as procurement director for paper manufacturer Georgia-Pacific Corp. "Since April we've seen a pretty consistent decline in the growth of manufacturing. Now we've moved into a no-growth position."... The bond market is pessimistic about the prospects for near-term economic growth and views inflation as contained. It expects the Fed to lower interest rates early next year in an effort to reignite the economy. Mr. Bernanke has struck a more sanguine note, saying the weakness is primarily confined to the housing market. In a speech earlier this week, he also reiterated the need to stand guard against inflation and suggested that rate cuts are unlikely in the months ahead.

Friday's data strengthened the gloomy outlook in the bond market and among other pessimists.... Futures-market traders, mulling the prospect of a manufacturing recession and slower economic growth, increased the probability that the Fed would cut interest rates by April to roughly 74% from 51% earlier in the day. And many economists lowered their outlook for economic growth this quarter after the ISM report's release. ...

Another worrisome sign for the economy surfaced Friday in a Commerce Department report on construction spending. According to the report, nonresidential construction fell in October for the second consecutive month, partially affected by a 3.1% drop in private manufacturing construction. Until recently, a surge in commercial construction had helped offset some of the pain caused by the downturn in residential construction. Residential construction retreated for the seventh consecutive month. Overall, construction spending fell 1% in October from September...