DEFINITION of 'HodrickPrescott (HP) Filter'
A datasmoothing technique that is commonly applied to remove shortterm fluctuations that are associated with the business cycle, thereby revealing longterm trends.
INVESTOPEDIA EXPLAINS 'HodrickPrescott (HP) Filter'
The HP filter is used to determine the long term trend of a time series by discounting the importance of short term price fluctuations. In practice it is used to smooth and detrend the Conference Board's Help Wanted Index (HWI) so that it can be benchmarked against the Bureau of Labor Statistic's JOLTS, an economic data series that may more accurately measure job vacancies in the U.S.
RELATED TERMS

Bureau Of Labor Statistics  BLS
A government agency that produces economic data that reflects ... 
Organized Labor
An association of workers united as a single, representative ... 
Detrend
In forecasting models, the process of removing the effects of ... 
HelpWanted Index  HWI
The U.S. job market index, published monthly by the Conference ... 
Benchmark
A standard against which the performance of a security, mutual ... 
The Conference Board
A notforprofit research organization for businesses that distributes ...
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