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Adobe Digital Economy Project -- April 2017

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he Adobe DEP focuses on the U.K. this month, where the start of Brexit proceedings and the triggering of Article 50 appear to be dampening U.K. consumer confidence. After a few months of mostly normal economic activity post-vote, the first quarter of 2017 shows a -4.9% YoY decline in spending on select durables (computers and televisions) compared to the same category in the U.S. (13.9% YoY growth). Travel has remained unaffected, where revenue in domestic and international flight bookings in 2017Q1 in the U.K. is up 14.0% YoY

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Adobe Digital Economy Project -- April 2017

  1. 1. © 2017 Adobe Systems Incorporated. All Rights Reserved. ADOBE DIGITAL ECONOMY PROJECT APRIL 2017 UPDATE
  2. 2. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Main takeaways: April 2  The Adobe DEP focuses on the U.K. this month, where the start of Brexit proceedings and the triggering of Article 50 appear to be dampening U.K. consumer confidence. After a few months of mostly normal economic activity post-vote, the first quarter of 2017 shows a -4.9% YoY decline in spending on select durables (computers and televisions) compared to the same category in the U.S. (13.9% YoY growth). Travel has remained unaffected, where revenue in domestic and international flight bookings in 2017Q1 in the U.K. is up 14.0% YoY  The DPI also shows that consumers in the U.K. are facing higher prices for food, where grocery prices have been rising since last September and are up 1.0% YoY. Prices for televisions and computers are down YoY but deflation in computers is far from the level in the U.S. in the same category (prices down -0.2% YoY in the U.K. compared to -3.5% YoY in the U.S.) Price declines for televisions are similar in the U.S. and the U.K.  In the U.S., topline inflation is down across DPI categories (-0.1% in the all-items index and -0.2% in the all-items less grocery index). This is the first month of deflation in the DPI following four straight months of inflation. Prices remain down year-over-year in both indexes (-0.6% in the all-items index and -1.3% in the all-items less grocery index)  Deflation is driven in April by a drop in prices for flights (down -0.5% MoM), flat prices in grocery (0.0% MoM inflation), and deflation in several durables categories including appliances (-0.5% MoM), computers (- 0.7% MoM), toys (-1.5% MoM), and tablets (-2.1% MoM)  Grocery inflation in April is near-zero, but slightly positive, keeping grocery prices in the U.S. on track to show YoY inflation. Prices in the category are currently down -0.2% YoY. The largest price increases in the category MoM included meats and poultry (0.9%), rice and pastas (0.5%), and breakfast foods (0.3%). These rises were offset by price declines in dairy including milk (-0.6%), other dairy (-0.9%), and eggs (-1.9%), leading to overall unchanged prices  The April DPI contains state-level inflation data for the third time. The state-level data show that half of U.S. states experienced deflation while half experienced inflation  26 of the 51 states and D.C. showed inflation in April, while the remainder showed deflation. State-level price changes depended in April on how prices changed in those states in flights, hotels, or groceries
  3. 3. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Digital Insights Background Based on analysis ofaggregated and anonymous data from Adobe Experience Cloud: • Adobe Analytics and Adobe Mobile Services Thousands of brands worldwide including two thirds of Fortune 50 companies rely on Adobe Experience Cloud: • $7.50ofevery $10spent online with top 500 U.S.retailers go through Adobe Experience Cloud ** • Adobe Experience Cloud powers: • 20 ofthe top 30 U.S.employers • 9 of10largest hotel groups • 7of10largest airlines **Latest IR Top 500 Report 2015 3 Adobe Analytics Adobe Mobile Services
  4. 4. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Economist Advisors 4 Austan Goolsbee, University of Chicago  Robert P. Gwinn Professor of Economics at The University of Chicago's Booth School of Business  Formerly served as President Obama’s Chairman of the Council of Economic Advisers  Served as the youngest member of President Obama’s cabinet Pete Klenow, Stanford University  Professor, Department of Economics, Stanford University  Currently Visiting Scholar, Federal Reserve Bank of San Francisco  Member of editorial boards for Econometrica, American Economic Review, Quarterly Journal of Economics and others
  5. 5. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. 5 Digital Price Index (DPI) Job Seeking Index (JSI) Digital Housing Index (DHI)
  6. 6. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 6 Digital Price Index Methodology (DPI)
  7. 7. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Methodology – U.K. 7 Based on analysis of aggregated and anonymous data • Fisher Ideal Price Index • $6 of every $10 spent online with top 100 European retailers go through Adobe Experience Cloud ** • Based on analysis 1 billion website visits and 100k products sold online ONS: Consumer Price Index Adobe: Digital Price Index Quantities Sold No Yes Products/quantities updated Annually Daily Number of Products 180,000 100k (currently covered categories) Data Collection Frequency Monthly Daily Data Availability Monthly Daily Offline Prices Yes No Long history Yes No All categories of spending Yes No ** Latest IR U.K. Top 500 Report 2015
  8. 8. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Methodology – U.S. 8 Based on analysis of aggregated and anonymous data • Fisher Ideal Price Index • Adobe measures 80% of all online transactions from top 100 U.S. retailers ** • $7.50 of every $10 spent online with top 500 U.S. retailers go through Adobe Experience Cloud ** • Based on analysis of 15 billion website visits and 2.2 million products sold online BLS: Consumer Price Index BEA: Personal Consumption Expenditures Adobe: Digital Price Index Quantities Sold No No Yes Products/quantities updated Every 2 years Monthly Daily Number of Products 83 thousand (all categories) 83 thousand (all categories) 2.5 million (currently covered categories) Data Collection Frequency Bi-Monthly Monthly Daily Data Availability Monthly Monthly Daily Offline Prices Yes Yes No Long history Yes Yes No All categories of spending Yes Yes No Index Type Laspeyeres Fisher Ideal Fisher Ideal ** Latest IR Top 500 Report 2015
  9. 9. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. DPI Coverage of U.S. CPI Categories 9 DPI Category February 2017 DPI Weights All-Items All-Items Minus Groceries Grocery 54.00% N/A Furniture and bedding 5.16% 11.22% Hotels 4.99% 10.85% Personal care products 4.79% 10.40% Tools & Home Improvement 4.61% 10.03% Flights 4.27% 9.27% Pet Products 4.01% 8.72% Alcohol 3.99% 8.68% Sporting goods 2.95% 6.40% Auto Parts 2.62% 5.71% Nonprescription drugs 2.45% 5.33% Toys 2.00% 4.35% Computers 1.87% 4.07% Appliances 1.21% 2.63% Televisions 0.66% 1.44% Medical equipment and supplies 0.41% 0.89% Shelter Food Away From Home Vehicles Apparel Electricity, gas etc. Grocery Furniture Lodging Personal Care Np. DrugsCurrent DPI To be added to DPI Unlikely Professional services Hospital services
  10. 10. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Big data in DPI decreases uncertainty 10 DPI CPI Appliances 0.15% 0.46% Airfare 0.08% 0.51% Computers 0.28% 0.49% Furniture and bedding 0.07% 0.31% Grocery 0.10% 0.12% Hotels: domestic 0.04% 2.30% Medical equipment and supplies 0.20% 0.39% Nonprescription Drugs 0.18% 0.47% Sporting Goods 0.12% 0.31% Televisions 0.24% 0.60% Toys 0.25% 0.59%
  11. 11. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges 11 • Televisions have seen higher-ticket items deflate faster than lower-ticket items in 2015 • For computers, mid-range models priced between $700 and $1,200 showed the highest deflation last year *Price bins are determined based on the price the product had when originally launched (first price).
  12. 12. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. The Importance of detail: Black Friday discount comparisons 12 • DPI captures the effect of major discount holidays like Black Friday and Cyber Monday because it measures quantities and does so in real-time • Prices online for Televisions dropped later in November 2016 than in 2015, with more discounts during the Black Friday week (Monday 11/21 through Cyber Monday), which accounted for more than half of all Televisions units purchased between November and December • Television prices then increased more in December 2016 than they did in December 2015, a sign that retailers were able to capitalize on later shopping
  13. 13. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Measuring rapidly shifting consumer preferences 13 • Electronics see an average of 77% of online spend on new* products** • 17% of monthly online spend for groceries on new products * Products that have been available for 1 year or less ** A product is defined as an item for purchase which has an unique identifier (such as a SKU)
  14. 14. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. State-by-state inflation: examples of sources of variance 14 1. Different baskets across states • Consumers in western states buy more on organic fruits and vegetables than other regions • Consumers in southern states buy more meats, poultry and fish than other regions 2. Different shopping attitudes, preferences across states • Consumers in states with lower median incomes tend to shop more on heavy-promotion days 3. Different prices for same products across states • Price-only variances across states tend to be bigger in groceries and smaller in consumer electronics
  15. 15. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 15 Digital Price Index Findings, U.K. (DPI)
  16. 16. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Limited Economic Impact Immediately Post-Brexit 16 • In the weeks following Brexit, eCommerce activity in the U.K. was normal • Adobe Digital Insights (ADI) International Holiday Report showed 11.0% YoY growth in holiday spending in the U.K., the strongest in Europe • ADI Europe Travel Report (forthcoming) shows domestic and international flight bookings in the U.K. dropped post-vote but rebounded back and travel spending has shown strong growth YoY (revenue up 14% YoY in 2017Q1)
  17. 17. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. As Brexit Proceedings Start, Consumers Pull Back 17 26.4% 15.3% 13.9% 11.3% 11.3% -4.9% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Q32016 Q42016 Q12017 YoY Growth in Computers and TVs by Quarter, U.S. and U.K. U.S. YoY Growth U.K. YoY Growth • Consumer spending in computers and TVs, a measure of consumer confidence, shows declines YoY in the U.K. Revenue in the category is down -4.9% YoY in 2017Q1, compared to an increase of 13.9% in the U.S. • The Office of National Statistics (ONS) reported retail sales fell -1.4% in 2017Q1, the first quarterly decline since 2013. • “This is the first time we’ve seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors.“ – Kate Davies, ONS Senior Statistician 1 1 Office for National Statistics: Retail Sales in Great Britain: March 2017. Available at: https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/mar2017
  18. 18. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Consumers in the U.K. Continue to Face Higher Food Prices 18 • U.K. shoppers have seen grocery prices on the rise since last summer, for six straight months, though prices are ticking down slightly in April. Adobe DPI for the U.K. shows cumulative inflation for groceries of 1.0% YoY (April 2016 to April 2017) though prices are down MoM for the first time in six months (down -0.1% MoM). Prices have been on the rise since September 2016 • U.K. computers and TVs are both showing YoY and MoM deflation, but deflation in computers is less than steep deflation for the same category in the U.S. • Computers in the U.K. saw a -1.5% deflation in April; the category is still showing -0.2% deflation YoY • After two straight months of inflation in televisions, computers saw a --- -3.2% deflation in April, bringing the category to -16.6% YoY
  19. 19. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 19 Digital Price Index Findings, U.S. (DPI)
  20. 20. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Consistent Inflation across the U.S., but prices down YoY 20 • Price changes are split in April : 26 out of 51 states plus D.C. are showing price rises, while 25 states are showing price declines • State inflation in April driven by travel and grocery prices: States that show inflation in April tended to also have inflation in flights, hotels, or groceries while states showing deflation had deflation in some or all of those same categories
  21. 21. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Travel driving price changes across states 21 Highest inflation by state Lowest inflation by state State April MoM Inflation Major Inflation Drivers Rhode Island 1.0% Hotels**, Flights* North Dakota 0.8% Flights*, Grocery Iowa 0.8% Flights*, Hotels** New York 0.6% Hotels**, Flights* Connecticut 0.6% Hotels**, Flights* State April MoM Deflation Major Deflation Drivers Texas -0.7% Flights*, Grocery Louisiana -0.8% Hotels**, Flights* Utah -0.9% Groceries, Computers Nevada -0.9% Hotels**, Grocery Arizona -1.4% Hotels**, Flights* * Flight prices are determined by the state of flight origin ** Hotel prices reflect hotel properties in a given state *** New categories introduced in this month’s Adobe DPI
  22. 22. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. March 2017 U.S. Recap 22 MoM: February to March MoM: February to March Difference (percentage) Same Sign? YoY: Cumulative March 2016-2017 YoY: Cumulative March 2016-2017 Difference (percentage) Same Sign? DPI CPI DPI vs. CPI DPI vs. CPI DPI CPI DPI vs. CPI DPI vs. CPI Alcohol -0.2% 0.2% -0.4% No -0.9% 0.5% -1.4% No Appliances 0.9% 0.1% 0.8% Yes -4.5% -2.8% -1.7% Yes Auto Parts 0.0% 0.4% -0.4% Yes -1.3% -0.2% -1.1% Yes Computers 0.9% -1.3% 2.2% No -4.9% -5.5% 0.6% Yes Flights 3.2% 1.1% 2.1% Yes 5.0% -0.2% 5.2% No Furniture and bedding -0.5% -0.1% -0.4% Yes -4.2% -1.8% -2.3% Yes Grocery 0.1% 0.1% 0.0% Yes -0.4% -0.9% 0.5% Yes Hotels 2.3% 0.0% 2.3% No 3.7% 0.0% 3.7% No Medical equipment and supplies -0.7% -0.1% -0.6% Yes -1.3% 1.0% -2.3% No Nonprescription drugs -0.1% 0.6% -0.7% No 0.6% 1.1% -0.5% Yes Personal care products 0.5% -0.6% 1.1% No -1.3% -1.3% 0.0% Yes Pet Products -0.1% 0.0% -0.1% No -0.7% -0.3% -0.4% Yes Sporting goods 0.0% -0.5% 0.5% No -5.2% -1.6% -3.6% Yes Televisions 0.6% -0.5% 1.1% No -17.5% -18.9% 1.4% Yes Tools & Home Improvement -0.2% 0.1% -0.3% No -2.2% -0.9% -1.3% Yes Toys -0.6% -1.3% 0.7% Yes -4.9% -8.3% 3.4% Yes Weighted Average Inflation* 0.3% 0.0% 0.3% Yes -0.8% -1.1% 0.3% Yes Weighted Aggregate Inflation, Less Grocery** 0.5% 0.0% 0.6% No -1.3% -1.4% 0.1% Yes * Weighted average inflation is calculated using CPI-U relative component weights (2014-2015) across the shared categories in the DPI and the CPI ** Grocery is a large component of the current CPI weights, so changes in grocery prices drive the majority of weighted average inflation. As we add more categories (like housing, auto etc.), these aggregate numbers will change. *** New categories introduced in this month’s Adobe DPI
  23. 23. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. April 2017 U.S. Summary 23 • Main MoM inflation in April: • International flights, international hotels, personal care products • Main MoM deflation in April: • Tablets, toys, medical equipment and supplies YoY MoM Alcohol -0.9% 0.0% Appliances -3.9% -0.5% Auto Parts -1.2% 0.0% Computers -3.5% -0.7% Electronics -8.9% -0.7% Flights 6.2% 0.3% Domestic Flights 5.5% -0.5% Intl Flights 7.4% 3.1% Furniture and bedding -3.8% -0.2% Grocery -0.2% 0.0% Hotels 2.2% 0.1% Intl Hotels -1.2% 1.5% Medical equipment and supplies -2.5% -1.2% Nonprescription drugs -0.1% -0.1% Personal care products -1.7% 0.2% Pet Products 0.8% 0.1% Sporting goods -5.8% -1.3% Tablets -15.5% -2.1% Televisions -15.8% 0.5% Tools & Home Improvement -2.5% -0.5% Toys -4.7% -1.5% Weighted Average Inflation* -0.6% -0.1% Weighted Aggregate Inflation, Less Grocery** -1.3% -0.2% * Weighted average inflation is calculated using CPI-U relative component weights (2014-2015) across the shared categories in the DPI and the CPI ** Grocery is a large component of the current CPI weights, so changes in grocery prices drive the majority of weighted average inflation. As we add more categories (like housing, auto etc.), these aggregate numbers will change. *** New categories introduced in this month’s Adobe DPI
  24. 24. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Alcohol 24 • Adobe DPI shows cumulative deflation of -0.9% YoY (April 2016 to April 2017) • Prices for Beer show cumulative inflation of 2.9% YoY • Prices for Spirits show cumulative inflation of 0.2% YoY • Prices for Wine show cumulative deflation of -3.0% YoY • For April 2017, prices increased 0.0% vs March 2017 MoM METHODOLOGY: • The data used reflect transactions for ~120 K products
  25. 25. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Appliances 25 • Adobe DPI shows cumulative deflation of -3.9% YoY (April 2016 to April 2017) • Main YoY price decreases for Appliances priced between $200 and $400 • For April 2017, prices decreased -0.5% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~110 K products • Products include large appliances such as fridges, ovens, washers, dryers as well as smaller appliances such as vacuums, mixers, blenders etc
  26. 26. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Auto Parts 26 • Adobe DPI shows cumulative deflation of -1.2% YoY (April 2016 to April 2017) • Main YoY price decreases for Auto Parts priced greater than $200 • For April 2017, prices increased 0.0% vs March 2017 MoM METHODOLOGY: • The data used reflect transactions for ~300 K products
  27. 27. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Airfare 27 • Adobe DPI shows cumulative inflation of 6.2% YoY (April 2016 to April 2017) • For April 2017, prices increased 0.3% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable
  28. 28. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Airfare: domestic 28 • Adobe DPI shows cumulative inflation of 5.5% YoY (April 2016 to April 2017) • Largest monthly inflation to South Dakota (14.1% MoM), North Dakota (12.7% YoY), and West Virginia (8.8% YoY) • Largest monthly deflation to Colorado (-3.9% MoM), Arizona (- 3.1%) and Oregon (-.3.0%) • For March 2017, prices decreased 0.5% vs February 2017 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable
  29. 29. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Airfare: international 29 • Adobe DPI shows cumulative inflation of 7.4% YoY (April 2016 to April 2017) • Largest price increases for airfare were to South America, with inflation of 21.6% YoY • Largest price decreases are for airfare to Europe with deflation of - 3.4% YoY • For April 2017, prices increased 3.1% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable
  30. 30. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics 30 • Adobe DPI shows cumulative deflation of -8.9% YoY (April 2016 to April 2017) • Main YoY price decreases for Electronics priced greater than $1500 • For April 2017, prices decreased -0.7% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~1 M products • Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games,printersetc..
  31. 31. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: computers 31 • Adobe DPI shows cumulative deflation of -3.5% YoY (April 2016 to April 2017) • Main YoY price decreases for Computers priced between $700 and $1200 • Main YoY price increases for Computers priced between $0 and $300 • For April 2017, prices decreased -0.7% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~63 K products • Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games,printersetc..
  32. 32. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: televisions 32 • Adobe DPI shows cumulative deflation of -15.8% YoY (April 2016 to April 2017) • Main YoY price decreases for Televisions priced greater than $2000 • For April 2017, prices increased 0.5% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~33 K products • Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games,printersetc..
  33. 33. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: tablets 33 • Adobe DPI shows cumulative deflation of -15.5% YoY (April 2016 to April 2017) • Main YoY price decreases for Tablets priced between $550 and $900 • For April 2017, prices decreased -2.1% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~13 K products • Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games,printersetc..
  34. 34. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Furniture and Bedding 34 • Adobe DPI shows cumulative deflation of -3.8% YoY (April 2016 to April 2017) • Main YoY price decreases for Furniture and bedding priced between $150 and $250 • For April 2017, prices decreased -0.2% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~173 K products • Products include interior and exterior furniture, mattresses and other bedding products
  35. 35. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Groceries 35 • Adobe DPI shows cumulative deflation of -0.2% YoY (April 2016 to April 2017) • Main YoY deflation for eggs (-16.6%), beverages (-1.8%) and flour (-1.5%) • For April 2017, prices increased 0.0% vs March 2017 MoM • Main price increases for meats, poultry (inflation 0.9% MoM), rice and pasta (0.5% MoM). breakfast (0.3% inflation MoM) METHODOLOGY: • Our dataset covers an estimated 30-40% of all online grocery purchases. It contains transactions for ~195k products • The mix of grocery products bought online is not the same as offline – the top category for online shopping is drinks (nonalcoholic), while for offline shopping it is meat
  36. 36. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Hotels: domestic 36 METHODOLOGY: • The data used contains transactions for ~250 K hotel properties • Includes associated fees, where applicable • Adobe DPI shows cumulative inflation of 2.2% YoY (April 2016 to April 2017) • Largest inflation in April in Massachusetts (7.6% MoM), New York (6.0%), Rhode Island (5.5%) • Largest deflation in April in to Airzona (-16.4%), Florida (-8.8%), and Washington D.C. (-.5.4%) • For April 2017, prices increased 0.1% vs March 2017 MoM
  37. 37. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Hotels: international 37 METHODOLOGY: • The data used contains transactions for ~250 K hotel properties • Includes associated fees, where applicable • Adobe DPI shows cumulative deflation of -1.2% YoY (April 2016 to April 2017) • Largest price increases were for hotels in North America (4.0% inflation YoY) • Largest price decreases were for hotels in Asia (-2.3% deflation YoY) • For April 2017, prices increased 1.5% vs March 2017 MoM
  38. 38. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Medical Equipment and Supplies 38 • Adobe DPI shows cumulative deflation of -2.5% YoY (April 2016 to April 2017) • Main YoY price decreases for Medical equipment and supplies priced between $45 and $135 • For April 2017, prices decreased -1.2% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~6,000 products • Includes supportive and convalescent equipment, dressings and first aid kits, and medical equipment for general use
  39. 39. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Nonprescription drugs 39 • Adobe DPI shows cumulative deflation of -0.1% YoY (April 2016 to April 2017) • Main YoY price decreases for Nonprescription Drugs priced between $0 and $10 • Main YoY price increases for Nonprescription Drugs priced between $25 and $40 • For April 2017, prices decreased -0.1% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~16 K products • Includes all non-prescription medicines taken by swallowing, applying on your skin (such as topicals), inhaling, as suppositories, or enemas.
  40. 40. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Personal care products 40 • Adobe DPI shows cumulative deflation of -1.7% YoY (April 2016 to April 2017) • Main YoY price decreases for Personal care products priced between $10 and $30 • Main YoY price increases for Personal care products priced greater than $150 • For April 2017, prices increased 0.2% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~110 K products • Includes cosmetics, lotion, hair (shampoo, conditioner) and nail care
  41. 41. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Pet products 41 • Adobe DPI shows cumulative inflation of 0.8% YoY (April 2016 to April 2017) • Main YoY price decreases for Pet Products priced between $10 and $20 • Main YoY price increases for Pet Products priced between $0 and $10 • For April 2017, prices increased 0.1% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~70 K products • Includes pet food & treats, kitty litter and accessories (leashes, pet beds)
  42. 42. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Sporting Goods 42 • Adobe DPI shows cumulative deflation of -5.8% YoY (April 2016 to April 2017) • Main YoY price decreases for Sporting Goods priced between $200 and $350 • For April 2017, prices decreased -1.3% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~300 K products • Products include small equipment and accessories (balls, gloves, uniforms) as well as large equipment such as treadmills, weightlifting tools etc.
  43. 43. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Tools & Home Improvement 43 • Adobe DPI shows cumulative deflation of -2.5% YoY (April 2016 to April 2017) • Main YoY price decreases for Tools & Home Improvement priced between $140 and $280 • For April 2017, prices decreased -0.5% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~225 K products
  44. 44. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Toys 44 • Adobe DPI shows cumulative deflation of -4.7% YoY (April 2016 to April 2017) • Main YoY price decreases for Toys priced between $70 and $200 • For April 2017, prices decreased -1.5% vs March 2017 MoM METHODOLOGY: • The data used contains transactions for ~249 K products • Products include toys, games as well as playground equipment
  45. 45. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 45 Job Seeking Index (JSI)
  46. 46. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Online job seeking continues YoY declines 46 METHODOLOGY: • Based on analysis of aggregated and anonymous data from more than 1 billion visits to U.S. employment-search websites and top employer career pages • Adobe Experience Cloud powers 20 of the top 30 U.S. employers** US online job seeking is down -18.1% YoY in April
  47. 47. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 47 Digital Housing Index (DHI)
  48. 48. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Online housing search grows YoY 48 METHODOLOGY: • Based on analysis of aggregated and anonymous data from more than 2 billion visits to U.S. housing search websites Online search for purchases and rentals is up 10.0% YoY in April.
  49. 49. © 2017 Adobe Systems Incorporated. All Rights Reserved. Appendix 49
  50. 50. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges, cont’d (tablets) 50 • Tablets have seen higher-ticket items deflate faster than lower-ticket items • The greatest price decrease and increase in November and December were for tablets priced between $350 and $600 *Price bins are determined based on the price the product had when originally launched (first price).
  51. 51. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges, cont’d (televisions) 51 • The highest priced televisions have have seen faster deflation than lower priced items • The greatest price decrease in November and increase in December were for TVs priced between $600 and $1,000 *Price bins are determined based on the price the product had when originally launched (first price).
  52. 52. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges, cont’d (televisions) 52 • Mid-range computers have seen faster deflation than lower and higher priced models • The greatest price decrease in November were for mid range computers between $700 and $1,200 while the greatest price increase in December were for lower priced models between $300 and $700 *Price bins are determined based on the price the product had when originally launched (first price).
  53. 53. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Price Index: Fisher Ideal Price Index ∑𝑖𝑖=1 𝑛𝑛 𝑃𝑃𝑖𝑖𝑖𝑖 𝑈𝑈𝑖𝑖𝑖𝑖−1 ∑𝑖𝑖=1 𝑛𝑛 𝑃𝑃𝑖𝑖𝑖𝑖−1 𝑈𝑈𝑖𝑖𝑖𝑖−1 ∗ ∑𝑖𝑖=1 𝑛𝑛 𝑃𝑃𝑖𝑖𝑖𝑖 𝑈𝑈𝑖𝑖𝑖𝑖 ∑𝑖𝑖=1 𝑛𝑛 𝑃𝑃𝑖𝑖𝑖𝑖−1 𝑈𝑈𝑖𝑖𝑖𝑖 • The Fisher Ideal Price Index uses quantities purchased on the current period (month) and a previous period (previous month) to determine actual consumer’s preferences. Instead of assuming that consumers preferences for what goods to buy are constant over a certain number of years, it is able to account for the fact that they are constantly changing what they buy. 𝐹𝐹𝐹𝐹𝐹𝐹 𝐹𝐹𝐹𝐹𝐹 𝜋𝜋𝑡𝑡 =
  54. 54. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Methodology Comparison: Fisher, Laspeyres and Paasche
  55. 55. © 2017 Adobe Systems Incorporated. All Rights Reserved.

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