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Adobe Digital Economy Project - February 2017

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In February, Adobe’s Digital Price Index (DPI)—a one-of-a-kind analysis of real-time consumer spending based on 15 billion website visits and 2.2 million product sales—detected a third consecutive month of inflation across the U.S. And, for the first time in any analysis of U.S. inflation, Adobe leverages its unique dataset to analyze prices state-by-state for all 50 states plus D.C., creating an unprecedented view of how inflation impacts different regions, and why details like discounts and grocery prices matter deeply on a local level.

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Adobe Digital Economy Project - February 2017

  1. 1. © 2017 Adobe Systems Incorporated. All Rights Reserved. ADOBE DIGITAL ECONOMY PROJECT FEBRUARY 2017 UPDATE
  2. 2. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Main takeaways: February 2  The Adobe DPI shows a third-straight month of inflation across both indices in the U.S (0.4 percent in the all-items index and 0.4 percent in the all-items less grocery index). This is first time in the 39 months of the Adobe DPI that both indices show three consecutive months of inflation. February inflation is driven by price increases in nondurables including: groceries (0.4%), flights (5.3%), hotels (2.9%), nonprescription drugs (0.3%) and alcohol (0.3%). Prices in the U.S. for DPI categories overall remain down -1.3% YoY, driven by price declines in grocery over the last 12 months.  Nondurables generally show price increases in the 2nd month of the year, but the DPI is showing higher than normal increases in flights, groceries, and alcohol. Price increases in dairy and bakery products are driving grocery inflation in the DPI while rising fuel prices may be leading to higher inflation in flights. Inflation is higher in every category of alcohol (beer, wine, and spirits) than last February. Inflation for wine in February 2017 was twice (0.6%) than in February 2016 (0.3%). Inflation for hotels and nonprescription drugs in February is typical of February inflation in years past.  The February Adobe DPI contains first-ever state-level estimates of inflation across all U.S. states and D.C.. State level inflation numbers provide critical new information about significant regional differences in consumer preferences and prices. The main factors driving differences in inflation across states are tied to consumer behavior, such as different preferences for different product categories and products, as well as price sensitivity.  When it comes to price sensitivity, DPI data shows that in the latest holiday season, consumers in states with lower incomes were more likely to purchase their Televisions during the Black Friday week (11/21-11/28) than consumers in states with higher incomes.  The February state inflation rates show that monthly inflation is steady and widespread, but higher on average in the U.S. South.  MoM inflation is occurring everywhere across the U.S: 40 out of the 51 states plus D.C. showed 3 straight months of inflation. West Virginia (1.01%), Oregon (0.88%), and Virginia (0.81%) show the highest MoM inflation in February among all states.  Clear regional differences exist: Monthly inflation in February was highest on average in the South and lowest in the Northeast, driven by higher inflation in groceries and flights in the South.  Prices are still down year-over-year, driven by lower grocery prices: Prices are down YoY in 47 out of the 51 states plus D.C. show cumulative inflation since February 2016. Most of this YoY is due to lower grocery prices, which are now seeing a rebound. Adobe DPI for the U.K. shows cumulative inflation for groceries of 0.6% YoY (February 2016 to February 2017), with a fifth-straight month of inflation and the largest MoM increase for the category (1.0% MoM inflation). Prices are on the rise for computers in the U.K. as well,
  3. 3. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Digital Insights Background Based on analysis of aggregated and anonymous data fromAdobe Marketing Cloud: • Adobe Analytics and Adobe Mobile Services Thousands of brands worldwide including two thirds of Fortune 50 companies rely on Adobe Marketing Cloud: • $7.50of every $10spent online with top 500 U.S. retailers go through Adobe Marketing Cloud ** • Adobe Marketing Cloud powers: • 20 of the top 30 U.S. employers • 9 of 10largest hotel groups • 7of 10largest 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) JobSeeking 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 Marketing 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 Marketing 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 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 Profession al 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 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
  14. 14. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 14 Digital Price Index Findings (DPI)
  15. 15. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. State-by-state inflation: examples of sources of variance 15 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
  16. 16. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. MoM Inflation is occurring across the U.S., but prices down YoY 16 • Inflation is occurring everywhere across the U.S: 40 out of the 51 states plus D.C. showed 3 straight months of inflation • Regional prices and consumer preferences are significant: Monthly inflation in February was highest on average in Southern states and lowest in Northeastern states • Prices are still down compared to February 2016: Prices are down YoY in 47 out of the 51 states plus D.C. Only Oklahoma (0.5% YoY), Idaho (0.4%), Delaware (0.2%) and Alaska (0.1%) show cumulative inflation since last February
  17. 17. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Grocery, flights, hotels, alcohol and furniture driving variance 17 Highest inflation by state Lowest inflation by state State MoM Inflation Major Drivers West Virginia 1.01% Grocery, Flights, Hotels Oregon 0.88% Grocery, Flights, Hotels Virginia 0.81% Grocery, Flights, Hotels District of Columbia 0.78% Flights, Grocery, Hotels Illinois 0.77% Flights, Grocery, Hotels State MoM Inflation Major Drivers New Hampshire -0.16% Furniture and Bedding, Toys, Grocery Wyoming -0.39% Furniture and Bedding, Flights, Toys North Dakota -0.43% Furniture and Bedding, Flights, Auto Parts Montana -0.79% Alcohol, Furniture and Bedding, Grocery Connecticut -1.26% Grocery, Furniture and Bedding, Toys
  18. 18. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. States with lower incomes more reliant on deep discounts 18 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 $70,000 $75,000 $80,000 35% 40% 45% 50% 55% 60% MedianIncome(2015) Percent of TVs Bought During Black Friday Week 2016 State median income vs. Percent of televisions bought on Black Friday week • Across the U.S., more than half of all TVs purchased in November and December were purchased during Black Friday week in 2016 • The Adobe DPI shows that for states with lower median incomes took more advantage of TV sales during Black Friday week in 2016 West Virginia Washington, D.C.
  19. 19. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation levels differ significantly by region 19 Topline Inflation Topline Inflation Less Grocery Geography February 2017 MoM (Average) February 2016 February 2017 YoY (Average) February 2017 MoM (Average) February 2016 February 2017 YoY (Average) Midwest Region 0.3% -1.6% 0.1% -2.1% Northeast Region 0.0% -2.3% 0.4% -2.2% South Region 0.5% -1.2% 0.3% -1.6% West Region 0.3% -0.9% 0.1% -1.3% United States 0.4% -1.3% 0.4% -1.6% • Geography plays an important role: Monthly inflation in February was highest on average in Southern states and lowest in Northeastern states • Southern states on average saw the highest levels of monthly inflation in flights and groceries among Census regions • Northeast states saw on average monthly declines in grocery prices
  20. 20. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe DPI Findings in the United Kingdom 20 • Adobe DPI for the U.K. shows cumulative inflation for groceries of 0.6% YoY (February 2016 to February 2017), with a fifth-straight month of inflation and the largest MoM increase in the DPI (1.0% MoM inflation) • U.K. computers and television inflation have diverged in recent months, though both saw MoM inflation in January • Computers in the U.K. saw a 0.3% inflation in February; the category is still showing -1.3% deflation YoY • Televisions in the U.K. saw a large 5.0% MoM inflation, the second straight month of inflation following several months of deflation
  21. 21. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. January 2017 U.S. Recap 21 MoM: December to January MoM: December to January Difference (percentage) Same Sign? YoY: Cumulative 2016-2017 YoY: Cumulative 2016-2017 Difference (percentage) Same Sign? DPI CPI DPI vs. CPI DPI vs. CPI DPI CPI DPI vs. CPI DPI vs. CPI Alcohol 2.6% 0.7% 1.9% Yes -0.1% 0.2% -0.3% No Appliances 1.7% 1.9% -0.2% Yes -5.1% -4.5% -0.5% Yes Auto Parts 0.8% 0.2% 0.6% Yes -1.4% -1.1% -0.3% Yes Computers -0.5% 0.2% -0.7% No -8.0% -4.0% -4.0% Yes Flights -3.5% 1.4% -4.9% No 1.1% -5.3% 6.3% No Furniture and bedding 0.6% 0.9% -0.3% Yes -3.5% -1.3% -2.2% Yes Grocery 0.1% 0.4% -0.3% Yes -1.2% -1.9% 0.7% Yes Hotels 4.3% 4.7% -0.4% Yes 3.1% -2.9% 6.0% No Medical equipment and supplies 0.1% 0.0% 0.1% No -1.5% -0.6% -0.9% Yes Nonprescription Drugs -0.1% 0.0% -0.1% No 0.0% -0.1% 0.1% No Personal Care Products 1.1% -0.1% 1.2% No -3.0% -0.9% -2.1% Yes Pet Products 1.1% -0.2% 1.3% No 0.2% 0.0% 0.2% No Sporting Goods 1.2% -0.2% 1.4% No -5.4% -1.4% -4.0% Yes Televisions 1.1% 2.8% -1.7% Yes -19.5% -21.2% 1.7% Yes Tools & Home Improvement 0.6% 0.1% 0.5% Yes -1.9% -0.8% -1.1% Yes Toys 3.4% 1.3% 2.1% Yes -6.7% -8.1% 1.4% Yes Weighted Average Inflation* 0.5% 0.6% -0.1% Yes -1.4% -2.0% 0.6% Yes Weighted Aggregate Inflation, Less Grocery** 1.0% 0.9% 0.1% Yes -1.8% -2.2% 0.5% 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
  22. 22. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. February 2017 U.S. Summary 22 • Main MoM inflation in February: • Flights, hotels, grocery • Main MoM deflation in February: • Tablets, toys, appliances YoY MoM Alcohol 0.3% 0.3% Appliances -4.5% -1.3% Auto Parts -1.3% -0.2% Computers -7.9% -0.6% Electronics -10.0% -0.9% Flights 3.7% 5.3% Domestic Flights 3.4% 6.0% Intl Flights 2.9% 3.3% Furniture and bedding -3.6% -1.1% Grocery -1.0% 0.4% Domestic Hotels 3.2% 2.9% Intl Hotels -1.1% 2.9% Medical Equipment and Supplies -1.0% -0.3% Nonprescription Drugs 0.3% 0.3% Personal Care Products -3.6% -0.6% Pet Products -0.1% -0.1% Sporting Goods -6.1% -0.9% Tablet -14.3% -3.8% Televisions -19.1% -1.0% Tools & Home Improvement -2.0% -0.1% Toys -7.1% -1.8% Weighted Average Inflation* -1.3% 0.4% Weighted Aggregate Inflation, Less Grocery** -1.6% 0.4% * 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. Alcohol 23 • Adobe DPI shows cumulative inflation of 0.3% YoY (February 2016 to February 2017) • Prices for Beer show cumulative inflation of 3.3% YoY • Prices for Spirits show cumulative inflation of 1.2% YoY • Prices for Wine show cumulative deflation of -1.4% YoY • For February 2017, prices increased 0.3% vs January 2017 MoM METHODOLOGY: • The data used reflect transactions for ~120 K products
  24. 24. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Appliances 24 • Adobe DPI shows cumulative deflation of -4.5% YoY (February 2016 to February 2017) • Main YoY price decreases for appliances priced between $200 and $400 • For February 2017, prices decreased -1.3% vs January 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
  25. 25. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Auto Parts 25 • Adobe DPI shows cumulative deflation of -1.3% YoY (February 2016 to February 2017) • Main YoY price decreases for auto parts priced greater than $200 • For February 2017, prices decreased -0.2% vs January 2017 MoM METHODOLOGY: • The data used reflect transactions for ~300 K products
  26. 26. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Airfare 26 • Adobe DPI shows cumulative inflation of 3.7% YoY (February 2016 to February 2017) • For February 2017, prices increased 5.3% vs January 2017 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable
  27. 27. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Airfare: domestic 27 • Adobe DPI shows cumulative inflation of 3.4% YoY (February 2016 to February 2017) • For February 2017, prices increased 6.0% vs January 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: international 28 • Adobe DPI shows cumulative inflation of 2.9% YoY (February 2016 to February 2017) • Largest price increases for airfare were to South America, with inflation of 19.6% YoY • Largest price decreases are for airfare to Europe with deflation of -9.4% YoY • For February 2017, prices increased 3.3% vs January 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. Electronics 29 • Adobe DPI shows cumulative deflation of -10.0% YoY (February 2016 to February 2017) • Main YoY price decreases for electronics priced greater than $1500 • For February 2017, prices decreased -0.9% vs January 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..
  30. 30. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: computers 30 • Adobe DPI shows cumulative deflation of -7.9% YoY (February 2016 to February 2017) • Main YoY price decreases for computers priced between $700 and $1200 • Main YoY price increases for computers priced between $0 and $300 • For February 2017, prices decreased -0.6% vs January 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..
  31. 31. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: televisions 31 • Adobe DPI shows cumulative deflation of -19.1% YoY (February 2016 to February 2017) • Main YoY price decreases for televisions priced greater than $2000 • For February 2017, prices decreased -1.0% vs January 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..
  32. 32. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Electronics: tablets 32 • Adobe DPI shows cumulative deflation of -14.3% YoY (February 2016 to February 2017) • Main YoY price decreases for tablets priced between $350 and $550 • For February 2017, prices decreased -3.8% vs January 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..
  33. 33. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Furniture and Bedding 33 • Adobe DPI shows cumulative deflation of -3.6% YoY (February 2016 to February 2017) • Main YoY price decreases for furniture and bedding priced between $100 and $150 • For February 2017, prices decreased -1.1% vs January 2017 MoM METHODOLOGY: • The data used contains transactions for ~173 K products • Products include interior and exterior furniture, mattresses and other bedding products
  34. 34. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Groceries 34 • Adobe DPI shows cumulative deflation of -1.0% YoY (February 2016 to February 2017) • Main YoY deflation for eggs (-22.7%), beverages (-3.2%) and cheese (-2.2%) • For February 2017, prices increased 0.4% vs January 2017 MoM • Main price increases for dairy products including ice cream (inflation 1.3% MoM) and cheese (1.0% MoM). Meats and poultry products also saw a 0.6% MoM increase 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
  35. 35. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Hotels: domestic 35 METHODOLOGY: • The data used contains transactions for ~250 K hotel properties • Includes associated fees, where applicable • Adobe DPI shows cumulative inflation of 3.2% YoY (February 2016 to February 2017) • For February 2017, prices increased 2.9% vs January 2017 MoM
  36. 36. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Hotels: international 36 METHODOLOGY: • The data used contains transactions for ~250 K hotel properties • Includes associated fees, where applicable • Adobe DPI shows cumulative deflation of -1.1% YoY (February 2016 to February 2017) • For February 2017, prices increased 2.9% vs January 2017 MoM
  37. 37. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Medical Equipment and Supplies 37 • Adobe DPI shows cumulative deflation of -1.0% YoY (February 2016 to February 2017) • Main YoY price decreases for medical equipment and supplies priced between $45 and $135 • Main YoY price increases for medical equipment and supplies priced greater than $135 • For February 2017, prices decreased -0.3% vs January 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
  38. 38. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Nonprescription drugs 38 • Adobe DPI shows cumulative inflation of 0.3% YoY (February 2016 to February 2017) • Main YoY price decreases for nonprescription drugs priced between $10 and $15 • Main YoY price increases for nonprescription drugs priced between $15 and $25 • For February 2017, prices increased 0.3% vs January 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.
  39. 39. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Personal care products 39 • Adobe DPI shows cumulative deflation of -3.6% YoY (February 2016 to February 2017) • Main YoY price decreases for personal care products priced greater than $150 • For February 2017, prices decreased -0.6% vs January 2017 MoM METHODOLOGY: • The data used contains transactions for ~110 K products • Includes cosmetics, lotion, hair (shampoo, conditioner) and nail care
  40. 40. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Pet products 40 • Adobe DPI shows cumulative deflation of -0.1% YoY (February 2016 to February 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 February 2017, prices decreased -0.1% vs January 2017 MoM METHODOLOGY: • The data used contains transactions for ~70 K products • Includes pet food & treats, kitty litter and accessories (leashes, pet beds)
  41. 41. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Sporting Goods 41 • Adobe DPI shows cumulative deflation of -6.1% YoY (February 2016 to February 2017) • Main YoY price decreases for sporting goods priced between $40 and $100 • For February 2017, prices decreased -0.9% vs January 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.
  42. 42. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Tools & Home Improvement 42 • Adobe DPI shows cumulative deflation of -2.0% YoY (February 2016 to February 2017) • Main YoY price decreases for tools & home improvement priced greater than $600 • For February 2017, prices decreased -0.1% vs January 2017 MoM METHODOLOGY: • The data used contains transactions for ~225 K products
  43. 43. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Toys 43 • Adobe DPI shows cumulative deflation of -7.1% YoY (February 2016 to February 2017) • Main YoY price decreases for toys priced between $200 and $300 • For February 2017, prices decreased -1.8% vs January 2017 MoM METHODOLOGY: • The data used contains transactions for ~249 K products • Products include toys, games as well as playground equipment
  44. 44. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 44 JobSeeking Index (JSI)
  45. 45. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Online job seeking continues YoY declines 45 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 Marketing Cloud powers 20 of the top 30 U.S. employers** US online job seeking is down -17.3% YoY in February
  46. 46. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 46 Digital Housing Index (DHI)
  47. 47. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Online housing search grows YoY 47 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 February.
  48. 48. © 2017 Adobe Systems Incorporated. All Rights Reserved. Appendix 48
  49. 49. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges, cont’d (tablets) 49 • 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).
  50. 50. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges, cont’d (televisions) 50 • 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).
  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 • 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).
  52. 52. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Digital Price Index: Fisher Ideal Price Index 𝑖=1 𝑛 𝑃𝑖𝑡 𝑈𝑖𝑡−1 𝑖=1 𝑛 𝑃𝑖𝑡−1 𝑈𝑖𝑡−1 ∗ 𝑖=1 𝑛 𝑃𝑖𝑡 𝑈𝑖𝑡 𝑖=1 𝑛 𝑃𝑖𝑡−1 𝑈𝑖𝑡 • 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. 𝐹𝑖𝑠ℎ𝑒𝑟 𝜋 𝑡 =
  53. 53. © 2017 Adobe Systems Incorporated. All Rights Reserved.© 2017 Adobe Systems Incorporated. All Rights Reserved. Methodology Comparison: Fisher, Laspeyres and Paasche
  54. 54. © 2017 Adobe Systems Incorporated. All Rights Reserved.

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