If you throw all the products we buy and the services we use in one basket, then add up the price tag, that's the Gross Domestic Product, which is the primary metric economists use to assess the economic health of a country or region.

The easy part of calculating GDP is the calculation itself: C+I+G+(X-M)=GDP. Got it? No? Well, add Consumption, Investment by companies, Government purchases, and then take the product of eXports (calling it 'E' would lack sexiness) minus iMports ('I' was taken). Viola! GDP.

Still don't get it? Well, knowing the components helps. Consumption is the biggest component, and it's a tally of the cost of all the goods and services we buy. Investment is what companies spend on the real assets they own, plus the value of the inventory that we haven't gobbled up through consumption. Government purchases are what the Feds pay money for (whether it be highways or fighter jets, though big social programs, like welfare, aren't counted). And then we calculate the difference between the goods and services we¿re sending to other countries and the stuff we're bringing in.

Good. That explains it, except there's a catch. Inflation has a habit of distorting the numbers, so economists talk about either Nominal GDP or Real GDP. In fact, Real GDP isn't necessarily "real" for most folks, since it takes any inflation out. Nominal GDP includes the effects of inflation. (There's something called the implicit price deflator which is a calculation using the two, but we'll spare you the details.)

So, now that we know GDP, why do we want to? Well, it's good to compare different markets. And watching the trend shows whether a given economy is growing (good), stagnating (not so good), or shrinking (very not so good). When GDP goes down two quarters in a row, we're officially in a recession.

For the record, GDP is released at the end of each month, with most reporting ¿preliminary¿ data for the previous month. But you won't get final GDP numbers for the fourth quarter of a year until the very end of the first quarter of the next year. After all, it's not an easy number to calculate.

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Wednesday, May 14, 2008

Bloomberg Seems Poised To Do Something Big -- But What?

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Jon Friedman

MarketWatch

NEW YORK -- It was big news when Bloomberg announced Monday that Norman Pearlstine, a senior adviser at the Carlyle Group, had joined the company as chief content officer. After all, Pearlstine had been the top news executive at Time Inc. and The Wall Street Journal.

But Pearlstine's newly created position may be a precursor to an even bigger story involving the powerful information and news company, which was founded by New York Mayor Michael Bloomberg.

By hiring someone with such impeccable credentials and connections, the Bloomberg company is making a statement: It's poised to do something BIG.

Remember, the company has the bucks. Bloomberg had 2007 revenue of $5.4 billion, roughly $4.7 billion of which came from sales of financial data, according to Max Bowie of Inside Market Data Reference.

At privately owned Bloomberg, the notion of doing "something big" in past years would have likely centered on speculation that it was about to go public or be sold to Microsoft (MSFT) . Since Dan Doctoroff arrived as president of Bloomberg, the company has made no secret of its desire to grow aggressively. It clearly has major aspirations.

The Times may be a-changin'

These days, inside Bloomberg, the buzz is that the company wants to acquire the New York Times (NYT) .

To be sure, Michael Bloomberg has thrown cold water on the idea, and Arthur Sulzberger Jr., the head of the Times, has said it's not for sale.

OK. But things can change.

If the Times suddenly found itself being pressured by an unwanted suitor and needed to call on a white knight, it could reach out to Bloomberg.

While Bloomberg's business and political skills would make him seem like an ideal choice to lead a rescue of the Times, his hands are tied for the next few years, anyway. He'd be risking an embarrassing conflict-of-interest headache if it turned out that the mayor of New York happened to be the biggest shareholder in a company that tried to buy the Times.

For now, Bloomberg L.P. is also preoccupied by the threat posed by the newly created Thomson Reuters (TRI) . The two global information-and-news powerhouses combined forces in a $17 billion deal to fend off Bloomberg.

The two Bloombergs

It will be interesting to see how Pearlstine's arrival affects his employer's internal politics.

His presence underscores what I -- a former employee of the company from 1993 to 1999 -- would call "the two Bloombergs" in the news division.

One is the faction of employees who steadfastly built the company throughout the 1990s while Michael Bloomberg (an inspirational leader) was in charge.

The other group, which is significantly smaller but highly influential, is made up of the many Wall Street Journal veterans who have gotten senior management positions under Matthew Winkler, Bloomberg's founding editor-in-chief and himself a Wall Street Journal veteran. (The Journal, like MarketWatch, the publisher of this column, is owned by News Corp. (NWS) .)

Which faction will ultimately prevail at Bloomberg: the lifers or the newcomers? It matters because the faction that wins will run the newsroom.

Pearlstine's mission

The company's biggest asset and source of wealth is the Bloomberg Terminal. Indispensable on Wall Street, the terminal gives users access to every imaginable piece of financial data and an array of original reporting from Bloomberg's 135 news bureaus.

Other company properties include television, Web, radio and publishing businesses.

Pearlstine, whose mission is to help Bloomberg reach a wider audience, might seem like a curious choice to fill the role of content chief, considering that Bloomberg's biggest challenges exists on the Web and in television.

In his heyday, Pearlstine made his name in the so-called "old" media of newspapers and magazines. Under his leadership, Time Warner's (TWX) Time Inc. wasn't known for having a forward-thinking Internet strategy.

Pearlstine is known for nurturing talented journalists. In the 1980s, when Pearlstine was at the helm, the Journal's glittering roster of reporters included James B. Stewart, Bryan Burrough, John Helyar (who joined Bloomberg just before Pearlstine) and Susan Faludi, all of whom went on to become tremendously successful authors.

Pearlstine has an ample challenge again. Bloomberg TV has a lot of potential. Like the reporting found on the terminal, the TV operation gets to the point and has no appetite for the chatty presentations you find on its rivals' channels.

If you liked Bloomberg TV, you'd say it was informative. If you disliked it, you'd call it deadly dull.

Another problem is that the TV operation has experienced an exodus. Over the years, some of its most prominent personalities -- Brian Sullivan, Dylan Ratigan, Erin Burnett and Trish Regan, to name a few -- have bolted to bigger enterprises. Perhaps the ever-resourceful Pearlstine could help give Bloomberg's TV stars a reason to stay put.

Bloomberg's Web presence could use some pizzazz, particularly in the area of multimedia services. Like every facet of the company, it's geared to serve the interests of its terminal users. This makes sense -- to a point. The company's Internet site should be accessible to everyone. It would take a little imagination.

Bloomberg has succeeded wildly at selling its terminals to finance professionals. But it hasn't come close to matching that success in its consumer-oriented businesses. The potential of these products has never quite been tapped.

Maybe Pearlstine will find a way

MEDIA WEB QUESTION OF THE DAY: What do you like -- or dislike -- about Bloomberg TV?

WEDNESDAY PET PEEVE: Why can't every sports broadcast be as good as the NBA on Time Warner's Turner system? The play-by-play announcers, especially the incomparable Marv Albert are terrific -- and the post-game analysts Charles Barkley, Kenny Smith, Magic Johnson and Ernie Johnson give the fans an insider's perspective. Walt Disney's (DIS) ESPN does a credible job in its coverage, but there's no comparison.

READERS RESPOND to my column on CBS News:

"Mr. Friedman: With all due respect, I think you and other media watchers are missing (have missed) the story about [Katie] Couric. The story is really about the absence of real management in the CBS (CBS) News division for years coupled to a leadership at the corporate level which has failed miserably to anticipate the future and sacrificed content to ratings."

-- Anthony P. Hatch, adjunct professor (broadcast news), Dept. of Communications & Journalism, University of New Mexico

Media Web appears on Mondays, Wednesdays and Fridays. Feel free to send email to jfriedman@marketwatch.com.