Google’s (NSDQ: GOOG) conference call is getting underway, and it should be an interesting one, following the miss. One interesting wrinkle so far: Google’s Chief Economist Hal Varian is on the call, and will talk about the economics of the business. He’s filling in for Larry Page who isn’t on the call. Kicking things off CEO Eric Schmidt began: “We’re obviously happy with what we believe are good results...” He hedged though, saying that Q2 is traditionally weak and that economic conditions are uncertain. He then quickly segued to the company’s deal with Yahoo (NSDQ: YHOO), calling it the company’s “signature event” of the quarter, and then quoting Chief Legal Officer David Drummond in defending the deal.

-- Outgoing CFO George Reyes: Slight decline in paid clicks is a result of seasonality and focus on quality ads. An interesting note: interest gains were weak in the quarter ($58 million vs $167 million in Q1) due to lower cash yields, increased hedging expenses and a decrease in cash balances due to DoubleClick.

-- Chief Economist Hal Varian: “Year on year revenue growth in every sector is positive except real estate.” Weak components: auto financing, real estate agencies, real estate financing. “Year over year auto ad spend is up, even though auto financing is down… auto financers are willing to spend on click, as the weakness is on the consumer side.” However, other consumer areas are up. To summarize: consumers are being cautious in their online spending, as they are offline.” (He’s interesting, but that was too short. They should let him talk more.) Bottom line: even Google isn’t immune to the economy.

-- Sergey Brin:: Always the least substantive part of the call… touting some initiatives like results that show up faster, Google translation tools, cross-language search and iGoogle (he changes his theme everyday). YouTube: 13 hours of video uploaded every single minute. Apps: “there are now more than half a million businesses using Google apps for their day-to-day productivity.

More from the Q&A after the jump…

Webcast (4:30 ET) | Transcript (via SeekingAlpha)

-- Mobile thoughts: Sergey Brin is asked to riff on mobile: revenue per query will vary from market to market. iPhone users do some 30x queries compared to others, though no comments yet on the iPhone 3G. Later an analyst asked whether there would be a total separate marketplace for mobile. Brin: Once you get these phones with capable browsers, there’s less reason to separate mobile and regular ads.

-- Economy: Schmidt turns it over to Varian to talk econ: “On the consumer side, I already mentioned some durables are holding up pretty well… I think part of what’s happening is, as times get a little more uncertain, price sensitive consumers are going to make every dollar count.” He predicted a Wal-Mart (NYSE: WMT) effect for Google, (i.e. the company benefits from price-sensitive consumers). Not clear how this squares with, well, the underwhelming quarter.

-- YouTube: Schmidt: “We’re enormously happy with YouTube… on the revenue side, we’re working on revenue scenarios; I personally do not believe that the perfect ad product has been invented yet.” Not the red meat investors and analysts have been craving.

-- DoubleClick: Not going to break out DoubleClick numbers.

-- Wireless Strategy and Android: The last question of the call concerns general wireless stuff: “We want our products on as many devices as possible. (Symbian, iPhone, Blackberries, Windows Mobile).” Android: “We’re still very excited… We are still expecting phones shipped by the end of the year.” Not much there ultimately. Call is done.

• Earnings: Google Q2 Revenue Solid But Income Is Light; Stock Whacked