Economists are puzzled.

Now there, you might think, is a novelty. In one corner of the dismal pseudo-science, they wonder how an economy can create half a million jobs while hurtling towards its third recession in four years. In another wing, perplexity abounds over the contrast between a soaring stock market and a plummeting pound.

The relevant fact, according to the Office for National Statistics (ONS), is that the United Kingdom's economy shrank by 0.3% in the last three months of 2012. That makes four quarters from five. The shining exception was the period containing the Olympics, a burst of growth bought, lest we forget, with the public subsidy of massive infrastructure projects. Has anyone told George Osborne?

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Visiting the World Economic Forum in Davos, Switzerland, yesterday the Chancellor was rounding up the usual suspect excuses. It's all the fault of Labour's debts and that European currency, he explained. This time he didn't mention snow. Perhaps it's not the done thing when there are Swiss folk around to explain that economies can function perfectly well amid the white stuff. But never mind.

The latest dire ONS number is, of course, subject to revisions. It will probably receive at least two of those before the statisticians are satisfied, but neither exercise is likely to amend reality. The usual range for second and third guesses is plus or minus 2%.

If Mr Osborne is lucky, therefore, the economy placed in his care shrank by a tiny bit. If the Chancellor's curse is at work, a whole half-point of GDP might have disappeared. Whatever the outcome, the central ONS judgment will stand: Britain was utterly stagnant in 2012. In terms of numbers, comparisons with the 1930s are no longer valid. This is the longest, deepest, most severe – you name it – depression since attempts were first made to quantify catastrophe.

Conclusions can be drawn. One, an obvious one, has to do with Mr Osborne. After all his promises of good times just around the corner after the next corner, the Chancellor contemplates a triple dip. It sounds like the sort of manoeuvre you should never attempt while skating on thin ice. That, for the Coalition, is pretty much what it is.

The fact is irrelevant to most people, but the time must be approaching when David Cameron recognises his old chum George as a liability. The barracking the Chancellor received at the Olympics merely dramatised the public mood. Mr Osborne is now the largest single obstacle between the Tories and the outright election win for which they lust.

In the meantime, a triple-dip recession is likely to cost Britain its AAA rating. In itself, this is of no account. The United States and France have managed well enough – and better than the UK – since having their pride dented. Given the behaviour of the agencies before and during the banking crash, when triple-As were strewn around Wall Street like confetti, it is not an accolade you necessarily want. But Mr Osborne invited us to judge him by his ability to retain the badge of honour. So take him at his word.

The International Monetary Fund did, in the beginning. The Chancellor spoke their language when he boasted that austerity would eradicate Britain's structural deficit in the space of a single Parliament. Now, having checked their sums and admitted, slightly shamefaced, that rapid retrenchment has done more damage than they had thought possible, IMF experts sound like fainthearted liberals.

This week, Olivier Blanchard, the fund's chief economist, announced it was time to think again. Speaking on Radio 4's Today programme, he gave the Chancellor a warning: "We said if things look bad at the beginning of 2013 – which they do – then there should be a reassessment of fiscal policy ... You have a Budget coming in March and we think that would be a good time to take stock and make some adjustments."

Mr Osborne has no such intention. In Switzerland, he again identified himself as the man with the only plan. He said he intended to confront the problems of debt and the eurozone "so we can go on creating jobs for the people of this country". Falling unemployment has become the Coalition's touchstone. As borrowing continues to rise, it has no other.

But what about those puzzled economists? They are asking themselves a reasonable question. It should be impossible for a contracting economy to create jobs. It should be beyond strange that unemployment in Scotland can fall by 14,000 while, simultaneously, the number of those in work is down by 24,000. Something about that Coalition touchstone doesn't ring true.

As a start, economists should remember the lesson learned in the 1980s: never trust the dole figures, or the spin. Slightly over three million people in the UK are classed by the ONS as "underemployed", for example, which is to say in work but desperate for more hours. The number of those classified as self-employed meanwhile continues to increase, to 4.2m. How many of those are engaged in odd jobs to avoid the stigma of unemployment?

Interpretation is one thing. The fact remains that the half-a-million jobs of which Mr Osborne and his colleagues boast have a single feature in common: in terms of GDP, they are wholly unproductive. If they add nothing to national wealth, you can bet few of them add much to the prosperity of those involved.

Many such individuals will be on low pay, on short-term or "zero hours" contracts, and on some form of in-work benefits. They used to be called the working poor. One thing you can guarantee about people in such a position is that, denied the chance to top up a pension or holiday abroad, they spend what they have. The economy could do with some consumer spending. Instead, Mr Osborne demands another round of social security cuts.

Everyone but the Chancellor knows the Chancellor is wrong. That he was egregiously wrong to give tax cuts to the rich while choking the economy is history, but not forgotten. Now even Nick Clegg has begun to whine – "sort of self-critical" – over his failure to prevent Mr Osborne's first cuts to capital spending. Two-and-a-half years too late, the LibDem leader concedes a tiny mistake might have been made.

Meanwhile, the stock market rises while the pound sinks and GDP falls. This is called mysterious. But for many investors, money is as cheap as it has ever been. Their activities are meanwhile wholly detached from the real economy. What goes on in Britain is of passing concern, in any case, to most FTSE 100 companies.

On his own trip to Davos, Mr Cameron lectured big firms on morality and their obligation to pay taxes now and then, if they would be so kind. He seemed to be saying if they were not careful, customers – people, voters, that kind of type – would catch on.

Mr Osborne is keeping most people busy with the struggle to get by. Last year there was a decline in average earnings growth, from 1.7% to 1.4%. Inflation stands at 2.7%: do the sum. It affects everyone beyond the Chancellor's circle, a group not philosophically averse, let's say, to a cowed, insecure, low-wage workforce bereft of a safety net.

It took six long years of misery before Margaret Thatcher could begin to boast of her economic miracle. Mr Osborne, if we're lucky, will not have the luxury of so much time.