When it comes to measuring a company’s economic well-being, people have it wrong on two levels, according to panelists at Friday’s Society of Business Editors and Writers conference. In short: neither statisticians nor journalists have found the real story behind gross domestic product.

The director of the United States Department of Commerce Bureau of Economic Analysis joined the growing debate shared by political leaders like President Barack Obama and French President Nicholas Sarkozy over just how adequate gross domestic product has been in measuring a country’s welfare. While there is no way to quantify happiness, said director Steve Landefeld, the BEA’s measures have been lacking. In fact, with better statistical analysis, they might have better predicted the housing bubble and financial crisis.

The “data really fell down on the job,” said Landefeld, as he showed charts that described a huge disparity between personal income and housing prices and data analysis that indicated little difference between Lehman Brothers or Bear Sterns and other, less-leveraged banks. A copy of Landefeld’s “GDP and Beyond” is available here and from the BEA.

The BEA should be comb over data more closely to better show bubbles and guide more sustainable practices, he said.

There may be even more to our misunderstanding of GDP than that, said fellow panelist Mike Mandel, editor in chief of Visible Economy LLC and former chief economist of Bloomberg Businessweek. The notion that consumer spending is 70 percent of GDP-used ad nauseam by journalists around the country – is misleading and just plain wrong, said Mandel.

Personal consumption expenditures does indeed account for roughly 70 percent of GDP. But PCE includes $1 trillion government spending on Medicare, Medicaid and Children’s Health Insurance Program (CHIP), said Mandel.

It also includes spending on imports. In the second quarter of 2010, consumer spending on motor vehicles rose by more than 6 percent. But domestic motor vehicle output fell by 2.6 percent during that time.

It’s a lot more complicated that many journalists have indicated, said Mandel.

The statement that consumer spending drives the economy is misleading, he reiterated. “It leads you to the wrong story.”

Jonathan Blum conducts a paenl on technology and journalism during the SABEW Conference

In the old days, all journalists needed were typewriters, notebooks and phone books.

But as technology changed and developed – as typewriters gave way to computers to laptops to iPads – the demand for instant information and more sources of information changed the way stories were filed, reported, and researched.

You could argue the courtship between journalism and technology got started with email; the relationship deepened with the advent of the BlackBerry and other smart phones.

But now, technology wants to take the relationship still further and marry journalism through collaborative software and real time editing in newsrooms. How? By moving journalism from the localized newsroom to Newsroom 2.0 through Google docs and social project management.

“Where we are now is at the debate of how collaboration tools work in the real world,” said Jonathan Blum founder and principal of Blumsday LLC during the SABEW fall conference at the City of New York Graduate School of Journalism. “It is much more than just Google docs, it is about real time, editing, collaborating.”

Blum was part of a panel discussion — which was liveblogged — on how cloud-based computing may help journalists in the newsroom. He was joined by Jonathan Rochelle, group product manager of Google Docs; Charles Seybold, CEO and CO-Founder of LiquidPlanner.com; and Pamela O’Hara, president of BatchBlue Software.

Software companies continue to create new programs that enable the speedy production and widespread distribution of content; is a computer program that can write articles as well next?

And the answer is no, no need to panic – at least according to the panel’s Google representative. Rochelle acknowledged that while innovations like Google Docs have made collaboration faster, Google is not in the business to eliminate journalism.

“Google values journalism and the role it plays in society,” Rochelle said. “Our goal is to just aggregate news, to make sure that those who are looking find good content.”

So then, what are the benefits and applications of Newsroom 2.0? For one, “the cloud” makes collaboration much easier, and easily accessible to a broader audience, according to Blum, whose company provides content for CNNMoney.com, TheStreet.com, Entrepreneur magazine and many others.

But the challenge will come in news organizations willing to pay for the new software and their willingness to train (and retrain) their staff.

“The fight is going to be in training the staff and fighting that battle,” Blum said. “Are you going to get rid of them if they don’t want to learn new software?”

An important question…

Brad Hintz, a senior equity analyst for Bernstein Research who spent 13 years on Wall Street as a partner at Morgan Stanley and as the CFO of Lehman Brothers, thinks financial companies are headed for a rough patch – but there’s still light at the end of the tunnel.

Low trading volumes may cut into financial firms’ profits and lead to lean times at Wall Street’s proprietary trading desks, Hintz told an audience at the Society of American Business Editors and Writers conference at the CUNY Graduate School of Journalism on Friday.

According to Hintz, the core problem facing these companies is at the retail level: average Americans have decided to take a pass on equities.

Certainly the financial meltdown of 2008 and the flash crash of May 6 – in which the Dow plunged nearly a thousand points in less than a half-hour, before bouncing back – have played a role in creating uneasiness among retail investors.

But Hintz says market history suggests there may be a more fundamental reason why investors have cold feet:

The geeky argument is that we found a wonderful correlation that says the individual investor in North America won’t begin to invest, no matter what the stock market does, until unemployment begins to go down.

Hintz believes that until the jobs picture improves, mom and pop investors will be wary of the volatile equity markets:

If you’re worried about whether you’re going to keep your job, do you really want to make bets in the stock market?

Hintz also pointed out that with money markets offering basically zero returns, retail investors have been flocking to bond funds:

What we seen in terms of the retail investor, we’re seeing money flowing into bond funds, which means if you’re a trader at Citi, Goldman or Morgan Stanley you saw retail funds going into bond funds and bond funds going up in value.

He says it’s a mystery why the interest in bond funds hasn’t translated into big trading profits in fixed income. The thing that isn’t easily understood, according to Hintz, is the relative moderation of the fixed income traders:

In my experience…this would’ve been a time when fixed income would’ve just coined money. And the fixed income traders would have ramped up their balance sheet, increased leverage, taken more risk and made a fortune, but… they didn’t.  Not only that, they didn’t take risk up and this is so out of character… you know, I mean has Wall Street found religion? Have the traders suddenly become choirboys?

But there is a light at the end of the tunnel, and it’s the glow of potential deal-making, according to Hintz.

Hintz recently spent time with former colleagues from Morgan Stanley, on the occasion of the firm’s 75th anniversary celebration at the Metropolitan Museum’s Temple of Dendur.

Those former colleagues, who are now dispersed among Wall Street’s major investment firms, apparently hinted that conditions are increasingly ripe for a burst of corporate buying.

According to Hintz, there are three cash-rich players: American companies, private equity firms with investor funds sitting on the sidelines and Asian investors hungry for resource, distribution and technology companies. All are waiting for the right moment to move:

All of this is lined up, so think of this as a giant Domino, all we need is that first one to go over…and I’m guessing 2011 is going to be a pretty good M&A year. Really all we need is that first CEO to gain a little courage and push it over.

Wall Street firms may not see trading profits go up, but brokering mergers and acquisitions is a better business anyway, as Hintz argued:

M&A and equity underwriting are two very high margin businesses

Not all Wall Street firms are likely to share equally in the M&A boom that Hintz foresees for 2011. As for who might partake of the spoils, Hintz says Goldman Sachs, which has seen its reputation affected by a recent SEC lawsuit, is likely to be a good bet.

By Carl Gaines

Following his speech this morning at SABEW (Society of American Businesses Editors and Writers) Fall Workshop, New York Federal Reserve CEO William C. Dudley opened up to journalists at a frank Q&A session about inflation and the role of monetary policy in the economic recovery.

“Today’s low and falling rate of inflation – at a time when interest rates are near zero – is a problem,” Dudley said.

“In this environment, a decline in inflation expectation drives up real interest rate and thereby increases the real cost of credit,” and it “cannot be offset simply by lowering the federal funds rate.”

Dudley, who has a PhD in Economics,  began with a speech about the cause and effects of the economic crisis – complete with (rather complicated) charts and graphs projected behind him.

But during the last ten minutes of the presentation, he switched gears and seemed to relax somewhat as he sat down with CUNY professor Greg David. During the discussion, Dudley reiterated the FOMC’s recent statement that inflation levels were running too low, and that must be communicated clearly to the public. “That’s why I’m here,” he said. “To reassure people and reduce dispersion of uncertainty.”

The Fed has tools, he said, to bring inflation back to target levels consistent with its dual mandate – the pursuit of the highest level of employment consistent with price stability . Such tools included expanding the Fed balance sheet.

“Simple calculations based on recent experience suggests that $500 billion of purchases would provide about as much stimulus as a reduction in the federal funds rate of between half a point and three quarters of a point,” he said.

Still, as Dudley reminded the workshop, the public must wait for the FOMC’s November announcement for any official views.