How to unpick the apparent paradox of falling GDP and rising unemployment

GDP estimates are eagerly awaited in the City, and dominate the media headlines. Huge significance is attached to arithmetically trivial differences, whether between market expectations and the announced figure, or to subsequent revisions to the data.

But GDP is not something which can be put in a set of scales, say, and measured accurately. The concept is clear. It is the value of national output at market prices. Market prices? How do we value the public sector, where there are no market prices? A series of plausible conventions has evolved as to how to value such activities. But there is a substantial amount of arbitrary judgment involved.