To start with you equation for GDP is wrong. I think the model you were trying to communicate is GDP = C + I + G + (X − M). That is how it is stated in Wikipedia.
Your premise is right but meaning less. GDP is not a definitive value of goodness produced by the country. Such a calculation would be too burdensome to produce and would be even more hotly debated than GDP.
I also thing the definition of a recession should be two consecutive quarters of negative per capita GDP growth. This would then include a measure of productivity and employment. If you use per capita GDP it is clearer the depth of the great recession and the weakness of the recovery.
Even today GDP overstates the strength of the economy compared to per capita GDP. 2017 GDP growth was 4.5% but per capita GDP was 1.6%
Productivity is more important than GDP if you are thinking of standard of living. More productive labor deserves greater compensation thus a higher standard of living. Alternately more productive labor reduces prices raising everyone's standard of living. Of course market forces could allow companies to funnel all productivity increases into increased profits.
Year-on-year, productivity increased 1.3 percent, reflecting a 3.7 percent gain in output and a 2.4 percent rise in hours worked.
See how informative those productivity stats are. It is telling you that most of the GDP growth came from an increase in hours worked and in this case that was because more people are working. The per capita GDP growth was from an increase in productivity.
Real average hourly earnings increased 0.5 percent, seasonally adjusted, from September 2017 to September 2018. The change in real average hourly earnings combined with the 0.6-percent increase in the average workweek resulted in a 1.1-percent increase in real average weekly earnings over this period.
With productivity growth at 1.3% and real hourly wage growth at 0.5% that leaves 0.8% of productivity growth to go to increased profit or reduced prices.
So yeah, you can’t tell much by just looking at GDP just like you can’t tell much from looking at just the headline unemployment numbers or CPI. If you live in a sound bite world you are living a fantasy. The world is more nuanced than that.
TEK
