Adobe Releases Inflation Rates for U.S. Economy for March
April 14 2016 - 12:00PM
Business Wire
Adobe Digital Price Index Adds Appliances, Toys, Furniture
and Bedding Categories to Its Real-time Analysis of U.S.
Economy
Companies innovate and introduce new products at neck-breaking
speeds while consumers buy more products online. Yet traditional
inflation reporting fails to take into consideration digital data
and real-time price and product changes. Adobe (Nasdaq:ADBE) is
addressing this with its monthly Digital Price Index (DPI), part of
the company’s Digital Economy Project. Two economists – Austan
Goolsbee, professor of economics at The University of
Chicago's Booth School of Business and former chairman of
the Council of Economic Advisers for President Obama, and Pete
Klenow, professor, department of economics at Stanford University –
have partnered with Adobe on the DPI.
Between February 2015 and February 2016 the DPI showed a
deflation in prices for most consumer goods categories. Prices for
TVs, computers, appliances, toys, furniture and bedding decreased
between 2.5 and 20.3 percent. In comparison, the U.S. Bureau of
Labor Statistics (BLS) only reported between 0.5 and 15 percent
price deflation for the same categories and time period. For
groceries, the DPI showed a slight inflation in prices with 0.8
percent while the BLS reported a decrease of 0.3 percent. In March
2016 prices for toys saw the largest non-holiday month-over-month
(MoM) decrease (2.9 percent) in two years.
The DPI analyzes billions of digital transactions involving
nearly 1.5 million products sold online, tracking digital
transactions more accurately than any other current source. The
official Consumer Price Index (CPI) compiled by the BLS, for
instance, relies on consumer surveys to approximate the actual
sales of each product category. The DPI uses transactional data on
the actual quantities purchased for millions of products and
captures the data in real-time. In addition to the DPI, the Digital
Housing Index (DHI) reports adjustments in online housing searches,
and the Job Seeking Index (JSI) measures shifts in online job
seeking activity.
“The DPI captures real-time pricing data that has notoriously
been impossible to measure, tracking 1.7 million consumer goods, in
comparison to the CPI’s 83,000,” said Mickey Mericle, vice
president, Data Insights at Adobe. “We’re able to identify
online pricing trends quickly and accurately, which is vital in
today’s digital age. The addition of toys, appliances and furniture
is the first set of many new categories that will be added to the
DPI bringing us one step closer to a combined, real-time inflation
rate for the U.S. economy.”
“Adobe is filling a void with the DPI, providing real-time
insights into people’s buying behaviors and price fluctuations of
millions of products,” said Professor Goolsbee. “Economists have
always wanted accurate inflation data that was based on data from
actual transactions and the DPI provides it.”
“The DPI has several advantages over traditional inflation
calculations, including Adobe’s tremendous volume of e-commerce
data,” said Professor Klenow. “Expanding the DPI in
March to encompass new consumer goods categories provides even
more visibility into the digital economy. Though its category
coverage is narrower than the CPI, Adobe has much more
product depth per category – in the millions of products in the DPI
overall vs. tens of thousands in the CPI.”
DPI Categories
The DPI added new categories – appliances, toys and furniture –
to its monthly analysis of retail goods. Latest findings
include:
- Appliances: Prices for
appliances in March decreased by 0.9 percent MoM with refrigerators
and dishwashers seeing the most deflation. In February 2016 the DPI
showed greater deflation YoY than the CPI (down 5.7 percent versus
2.7 percent, respectively). DPI appliance data is based on
online transactions of approximately 110,000 products between March
2014 and March 2016. Products include large appliances such as
refrigerators, ovens, washers and dryers, as well as small
appliances such as vacuums, mixers and blenders.
- Toys: In March 2016 prices for
toys saw a decline of 2.9 percent MoM. It is the largest
non-holiday MoM decrease since March 2014. Between February 2015
and February 2016, the DPI shows prices for toys decreased 4.6
percent compared to the CPI’s report of 7.1 percent deflation. DPI
data is based on online transactions for over 249,000 toys between
March 2014 and March 2016, including toys, games and playground
equipment.
- Furniture and Bedding: Furniture
and bedding prices remained flat in March 2016 with a slight
increase of 0.1 percent MoM, with prices for beds and mattresses
seeing the highest increases. In February, prices dropped one
percent versus January, in which the CPI reported 0.7 percent
deflation. The DPI shows a 2.5 percent deflation for furniture and
bedding YoY (February 2015 vs. February 2016) while the CPI reports
deflation of just 0.5 percent. DPI data is based on online
transactions of approximately 173,000 products between March 2014
and March 2016. Products include indoor and outdoor furniture,
mattresses, sheets, pillows and other bedding products.
- Electronics: In March 2016,
prices for electronics dropped 0.8 percent MoM, with computers and
TVs seeing the most deflation. Prices for electronics fell 10.2
percent between February 2015 and February 2016. The CPI doesn’t
break out electronics overall, but reports price deflation
of 15.0 percent for TVs and 7.8 percent for computers during
the same time period. In comparison, the DPI shows prices dropped
by over five percentage points more (20.3 percent) for TVs and 12.8
percent for computers. DPI data is based on online transactions of
one million electronics products between March 2014 and March
2016.
- Groceries (“Food at Home”): In
March, prices dropped 0.5 percent MoM, with fruit, vegetables,
non-alcoholic beverages and eggs seeing the most deflation. The DPI
shows inflation of 0.8 percent YoY (February 2016 versus February
2015). For the same time period, the CPI reports 0.3 percent
deflation for groceries. The DPI covers 30 to 40 percent of online
grocery transactions for approximately 195,000 products between
March 2015 and March 2016, and is heavily comprised of groceries
purchased online and picked up in-store.
Job Seeking & Digital Housing
Indices
- Job Seeking Index (JSI): Online
job seeking is down 15.2 percent YoY in March. Over the same
period, the BLS reported the (unadjusted) unemployment rate
decreased by 8.9 percent (5.1 percent in 2016). Adobe’s data comes
from the analysis of aggregated and anonymous data of one billion
visits to U.S. job search websites and top U.S. employer career
pages from March 2015 through March 2016. Adobe measures searches
of 20 of the top 30 U.S. employers.**
- Digital Housing Index (DHI):
Online search for purchases and rentals is up 15.7 percent YoY in
March. Adobe’s data comes from the analysis of aggregated and
anonymous data from more than two billion visits to U.S. housing
search websites between March 2015 and March 2016.
Methodology
Adobe is the first company to conduct a digital-centric analysis
based on real-time access to price-paid data and actual quantities
sold. Seven dollars and fifty cents out of every ten dollars spent
online with the top 500 U.S. retailers go through Adobe Marketing
Cloud.* The DPI is based on the analysis of aggregated and
anonymous data of four billion U.S. website visits and 1.7 million
products from February 2015 through March 2016.
Adobe Digital Index leverages the Fisher Ideal Price method,
which uses actual quantities purchased to measure inflation and is
recognized by leading economists as the gold standard for the
calculation of inflation. No other organization can use the Fisher
Ideal Price method today because they do not have enough data or
sufficiently timely data to make these calculations. With the
Fisher Ideal Price method, the DPI is able to take into account
that online shoppers find better prices from a competing or
substitute product if the price of an item suddenly increases. In
addition, because the DPI measures quantities and does so in
real-time, Adobe is able to accurately capture the effect of major
discount holidays like Black Friday and Cyber Monday.
About Adobe Marketing Cloud
Adobe Marketing Cloud empowers companies to use big data to
effectively reach and engage customers and prospects with highly
personalized marketing content across devices and digital touch
points. Eight tightly integrated Solutions offer marketers a
complete set of marketing technologies that focus on analytics, web
and app experience management and creation, testing and targeting,
advertising, video, audience management, social engagement and
campaign orchestration. The tie-in with Adobe Creative Cloud makes
it easy to quickly activate creative assets across all marketing
channels. Thousands of brands worldwide including two thirds of
Fortune 50 companies rely on Adobe Marketing Cloud.
Helpful Links
- Digital Economy Project Report
- Inaugural Digital Economy Announcement
(March 16, 2016)
- Adobe Digital Index Portal on
CMO.com
About Adobe
Adobe is changing the world through digital experiences. For
more information, visit www.adobe.com.
*Source: Internet Retailer’s 2015 Top 500
eGuide**Wikipedia
© 2016 Adobe Systems Incorporated. All rights reserved. Adobe
and the Adobe logo are either registered trademarks or trademarks
of Adobe Systems Incorporated in the United States and/or other
countries. All other trademarks are the property of their
respective owners.
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AdobeMelissa Chanslor, 415-832-5489chanslor@adobe.comStefan
Offermann, 408-536-4023sofferma@adobe.com
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