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Employment Cost Index (ECI)

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Employment Cost Index (ECI) The Employment Cost Index (ECI) is a key measure of how much employers are paying for labor. It tracks changes in the cost of wages, salaries, and employee benefits over time. The ECI is published quarterly by the U.S. Bureau of Labor Statistics (BLS). Unlike some other wage measures, the ECI is designed to show the true cost of labor by holding job types and industries constant. This makes it a reliable way to see whether compensation is rising or falling across the economy. For example, if the ECI shows a significant increase over several quarters, it could mean that workers are getting paid more or receiving better benefits. This might sound like good news, but it can also be a sign of inflation pressure. When businesses have to pay more to attract and keep employees, they may raise prices to cover those costs. This ripple effect can push overall inflation higher. Because of this, the ECI is closely watched by the Federal Reserve and other poli...
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JOLTS

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Job Openings and Labor Turnover Survey (JOLTS) The Job Openings and Labor Turnover Survey, or JOLTS, is a monthly report released by the U.S. Bureau of Labor Statistics. It tracks how many jobs are available (job openings), how many people are getting hired, and how many are leaving their jobs (whether by quitting, being laid off, or retiring). JOLTS gives us a behind-the-scenes look at the U.S. job market. For example, if job openings are rising but hiring is not keeping up, it might mean companies are struggling to find qualified workers. This could signal a mismatch between the skills employers want and the skills workers have. Why does this matter? Investors and policymakers watch JOLTS closely to understand the health of the economy. A strong job market usually means people have money to spend, which supports business growth. But if there are too many unfilled jobs, it can lead to wage increases as companies compete for talent. In turn, rising wages can lead to inflation, ...
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HPW Index

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HPW (Heise-Pearce-Weber Labor Market Tightness) Index The HPW Index is a tool that helps measure how “tight” the labor market is. In simple terms, it looks at how hard it is for employers to find workers. A higher HPW Index means businesses are having more trouble hiring because there are fewer job seekers available relative to job openings. Unlike the traditional unemployment rate, which only measures the share of people without jobs, the HPW Index combines multiple labor-market signals. These include job vacancies, worker mobility, and the intensity of job search. As a result, it provides a more realistic view of labor market conditions and underlying wage pressure. When the HPW Index rises, it often signals that employers are struggling to fill roles. This can lead to faster wage growth as firms compete for talent and may influence the Federal Reserve’s interest-rate decisions. A persistently tight labor market can contribute to inflation through hi...
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Phillips Curve

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Phillips Curve The Phillips Curve is a concept that shows the relationship between two key parts of the economy: inflation and unemployment. In simple terms, it suggests that when unemployment is low, inflation tends to be high. When unemployment is high, inflation tends to be low. This idea is based on the belief that when more people have jobs, they have more money to spend. This increased demand can push prices up, leading to inflation. On the other hand, when fewer people are working, spending drops and prices are more likely to stay stable or even fall. The Phillips Curve was widely accepted in the 1960s, but it ran into problems in the 1970s. During that decade, the U.S. experienced "stagflation" - high inflation and high unemployment at the same time. This challenged the idea that the trade-off between inflation and unemployment always holds true. Today, economists view the Phillips Curve as a short-term relationship. Over time, people adjust their expectati...
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Back to Basics: NAICS

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Back to Basics: NAICS (North American Industry Classification System) The North American Industry Classification System (NAICS) is the standard framework used to classify businesses based on what they actually do. Each business is assigned a six-digit code that reflects its primary line of activity. NAICS is used consistently across the United States, Canada, and Mexico , making it easier for governments, lenders, and researchers to collect and compare economic data. For example: A retail bakery may use 311811 – Retail Bakeries A construction company would fall under a completely different category Where NAICS Shows Up in Real Life NAICS codes aren’t just for statisticians - they show up in very practical situations: Business loans Government contracts Industry benchmarking Regulatory and risk analysis If you apply for financing or a public contract, the lender or agency will almost always look at your NAICS code to understand your industry’s risk...
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Strangle

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Strangle A strangle is a market-neutral options strategy used when a trader expects high volatility but isn't sure which way the price will swing. It’s the "budget-friendly" cousin of the straddle , designed to profit from explosive price movement. How it Works To execute a long strangle, you simultaneously buy two different options with the same expiration date but different strike prices : Out-of-the-Money (OTM) Call: Profit if the price skyrockets. Out-of-the-Money (OTM) Put: Profit if the price plunges. Because both options are OTM (the stock price sits between the two strikes), the "entry fee" or premium is lower than other volatility strategies. Example Scenario Stock Price: $100 The Trade: Buy a $105 Call and a $95 Put. The Goal: You need the stock to move significantly past $105 or $95 to offset the cost of both premiums. The Risk: If the stoc...
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Straddle

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Straddle A straddle is an options trading strategy that involves buying or selling both a call option and a put option for the same stock, with the same strike price and expiration date. This strategy is used when a trader expects the stock to move significantly, but is not sure which direction it will go. Here’s how a long straddle works: the call option makes money if the stock price goes up. The put option makes money if the stock price goes down. If the stock moves sharply in either direction, one of the options can become very profitable. The goal is for the gain on one option to outweigh the cost of both. For example, imagine a company is about to announce earnings. You expect the stock to move a lot based on the news, but you don’t know whether the news will be good or bad. A long straddle lets you potentially profit either way, as long as the stock moves enough. However, if the stock price stays close to the strike price, both options could lose value. This is the m...
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