Google CEO Eric Schmidt (pictured) thinks we’re out of the woods of Armageddon and are now somewhere in the netherworld between stabilization and recovery.

Large advertisers are coming back but he still calls the economic environment “weak.” He credited the company’s resilience for its performance.

Google pulled the stops out and applied fiscal discipline – like cutting payroll by 378 people – to come in with second-quarter earnings of $1.48 billion, $4.66 a share, up 19% year-over-year on revenues up a very un-Google-like of only ~3% to $5.52 billion. A low tax rate helped.

Traffic acquisition costs (TAC) cut total revenues ~27% to $4.07 billion, a shade better than some analysts had projected.

Google’s growth rate in the quarter was the lowest since it went public five years ago and its second consecutive quarter of single-digit growth, according to the AP.

US paid clicks were up 15% year-over-year but off 2% sequentially reportedly due to seasonality. Cost per click was up 5% on currency.

If Chrome OS succeeds, Schmidt said, “There will be many opportunities to build profitable services on top of that platform.” Schmidt first made a reference to Chrome OS about two minutes into the conference call.

Google won’t say whether or not YouTube is profitable but claims revenue growth and a “trajectory we’re very pleased with.”

The usually uncommunicative Google hosted an additional hour of Q&A with analysts after the conference call.

Its stock lost close to 15 bucks, over 3%, after hours.