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Bloomberg recently released its September survey of economists that covers estimates for GDP, consumer spending, unemployment, inflation and various interest rates. The most recent survey is important because it is the first one since the credit crisis really gathered steam, and we get to see how economists believe these indicators will be affected going forward. Below we highlight the median estimate for the various indicators along with the median estimates from last month's survey.

As shown, economists as a whole are still not predicting a recession (2 consecutive quarters of negative GDP), but their GDP estimates for Q4 '07 and Q1 '08 dropped quite a bit. Consumer spending is expected to drop the most in Q4 '07, and the unemployment rate is now expected to tick up to 4.9% by Q2 '08. One positive is that inflation [CPI] estimates moved lower as well, allowing the Fed more leeway to cut rates.

At the start of August, the median economist estimate for the Fed Funds Rate was 5.25% all the way through Q3 '08. Now, however, economists believe the Fed Funds Rate will be 5% by the end of this quarter, and then stabilize at 4.75% from Q4 '07 to Q3 '08. Even still, economist forecasts for Fed Funds are out of line with the market's expectations.

According to levels in the futures market, traders are expecting the Fed Funds rate to be as low as 4.25% within six months. While economists expect the Fed Funds Rate to drop, they also believe that 10 and 2 year Treasury yields will rise steadily through next year.