From Economist.com, “Grossly distorted picture“:

However, the single best gauge of economic performance is not growth in GDP, but GDP per person, which is a rough guide to average living standards. It tells a completely different story…

GDP growth figures flatter America’s relative performance, because its population is rising much faster, by 1% a year, thanks to immigration and a higher birth rate. In contrast, the number of Japanese citizens has been shrinking since 2005. Once you take account of this, Japan’s GDP per head increased at an annual rate of 2.1% in the five years to 2007, slightly faster than America’s 1.9% and much better than Germany’s 1.4%. In other words, contrary to the popular pessimism about Japan’s economy, it has actually enjoyed the biggest gain in average income among the big three rich economies. Among all the G7 economies it ranks second only to Britain (see left-hand chart).

Related to this is my earlier post where Warren Buffett echoed the same view that if recession is measured by decline of GDP per capita growth, the U.S. was already in recession.