August 2016 Digital Economy Project

2. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Main takeaways: August 2  This month we’ve expanded the DPI to include the United Kingdom, featuring a subset of the categories already covered in the U.S. Including categories such as groceries, computers and televisions, the U.K. DPI shows that, despite a weaker pound post-Brexit announcement, prices have remained stable relative to their historical trends.  The DPI also shows a strongly connected global economy, with a 60% correlation between the DPI in the U.K. and in the U.S. for import- heavy categories such as televisions and computers. For less import-heavy categories such as groceries, the correlation is much smaller, at 20%.  For the three categories we analyzed, the U.K. shows more deflation than the U.S.  After declining for two consecutive months, prices for air travel to the U.K. show signs of stabilization.  U.S. results signal continuing economic health and low inflation:  In the U.S. DPI, we see seasonal increases in August for Appliances and Furniture, likely due to higher demand during the back-to- school season and preparation for Labor Day sales. Grocery prices remain stable after 5 months of consecutive declines.  Toy prices increased in August, partly driven by Pokémon-related merchandise, which had price increases of 4.4% in August.  Our U.S. Job Seeking Index shows that online job seeking activity declined by 14.9% YoY, signaling continuing health in the job market.  Our U.S. Digital Housing Index shows that online housing seeking activity increased by 14.2% YoY, which is not as strong as results we saw early in the year, but still shows a strong housing market

3. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 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. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 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  The youngest member of the cabinet of President Obama 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

7. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 7 Adobe Digital Economy Project for the United Kingdom • Pages 8 through 12 relate to the Digital Economy Project for the United Kingdom • Comparisons to the CPI in those pages refer to the Consumer Price Index published monthly by the Organization for National Statistics (ONS)

8. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Methodology – U.K. 8 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 3 billion website visits and 150 k products sold online ONS: Consumer Price Index Adobe: Digital Price Index Quantities Sold No Yes Products/quantities updated Annually Daily Number of Products 180 k (all categories) 150 k (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 Europe Top 500 Report 2015

9. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Quotes: August Update 9 “New data sources such as those being used by Adobe provide innovative ways to understand our increasingly digital economy in real time. Many of these opportunities will be realised by bringing together independent, official statisticians and those using these new data sources and techniques in the private sector. Adobe's work is really interesting and developing trusted statistics using digital data could add significant value to official statistics.” Jonathan Athow, Deputy National Statistician, U.K. Office for National Statistics

10. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Adobe DPI in the United Kingdom 10 • Our Digital Price Index in the U.K. for groceries shows that grocery prices have deflated by 2.7% YoY in August, with very small price increases of .02% and .37% in July and August, respectively, with the August price increase likely due to seasonality. • For computers, we see YoY deflation of 13.4%. The post-Brexit announcement price decreases in July (-1%) and August (-.7%) are normal relative to previous months • The only area where we saw prices hint at an increase was televisions, where in July prices decreased only by .5% (compared to the average monthly decrease of 2.5%), but in August television prices seem to be back at their normal pace

11. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Decline in U.K. online orders for televisions and computers 11 Our data indicates a decrease in online sales in the two durable goods categories we analyzed: computers and televisions. While in May and June gross online sales in those categories were up by 33 and 28% year-over-year (as people naturally shift more of their spend online), in July they only grew by 16%, and in August they actually decreased by 10% YoY. Using the U.S. as a control, we see that the growth rate in online shopping has remained relatively flat in this same period: growth of 40.7% May YoY, 43.7% June YoY, 33.7% YoY in July and 30.2% YoY in August.

12. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 60% correlation in computers and televisions 12 • For computers and televisions, 60% correlation on average between the DPI results in the US and in the UK in the last 12 months, showing how much of a global economy we really live in. For groceries, not as import-heavy, the correlation is only of 20% • The U.K. shows more year-over-year deflation than the U.S. in all categories we analyzed: 1.2% more for computers, 4.4% more for televisions and 1.8% more for groceries • It shows the value of the DPI in measuring inflation using prices and quantities across countries using a single, standardized methodology

13. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Travel prices to the U.K. show signs of upward pressures 13 • Travel prices to the U.K. seem to be stabilizing – flight prices are up 3.1% relative to July and are down by only 1% year-over-year while hotel prices only declined by .8% since July and are down 16% year-over-year

14. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 14 Adobe Digital Economy Project for the United States • Pages 14 through 43 relate to the Digital Economy Project for the United States • Comparisons to the CPI in those pages refer to the Consumer Price Index published monthly by the Bureau of Labor Statistics (BLS)

15. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Methodology – U.S. 15 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 ** • $7.5 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 Adobe: Digital Price Index Quantities Sold No Yes Products/quantities updated Every 4 years Daily Number of Products 83 thousand (all categories) 2.2 million (currently covered categories) Data Collection Frequency Bi-Monthly Daily Data Availability Monthly Daily Offline Prices Yes No Long history Yes No All categories of spending Yes No ** Latest IR Top 500 Report 2015

16. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Quotes: August Update 16 “If you look at the growth rate of the US economy, it's only moderate -- there are a lot of international risks and there is no sign of inflation. While our long-run prospects are excellent, the next 12-18 months are likely to continue to have some significant bumps.” Austan Goolsbee, University of Chicago “There has been little good, micro-level data on the real economy in the UK to help us understand the impact of the Brexit vote. The Adobe DPI data suggest that prices for groceries and electronics did not change significantly. It will be important to keep monitoring the data in the months ahead.” Austan Goolsbee, University of Chicago

17. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Special topics: Pokémon Go 17 • Online sales of Pokémon-related merchandise in the U.S. have increased 227% between July 6th-Aug 31st when compared to the same period last year • Prices for Pokémon-related merchandise in the U.S., which had declined by 2.9% in July, increased by 4.4% in August

18. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Special topics: Louisiana Floods 18 • While domestic flight prices decreased by 3.6% in August relative to July, flight prices to Louisiana saw no price decreases • While domestic hotel prices decreased by 2.1% in August relative to July, hotel prices in Louisiana increased by 2% • For product categories such as OTC medications, medical equipment and supplies, tools & building materials we see no significant price increases relative to other regionsDisasters have little impact on inflation in advanced economies (…) In emerging and developing economies the impact of disasters can be large and persist for a number of years. Reserve Bank of New Zealand, April 2016

19. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Big data in DPI decreases uncertainty 19 DPI BLS 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%

20. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Inflation rates by price ranges 20 • Televisions have seen higher-ticket items deflate faster than lower-ticket items • In computers, models priced above $1,200 showing the least deflation in the category • Price bins are determined based on the price the product had when originally launched (first price).

21. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. The Importance of detail: Black Friday 21 • DPI captures the effect of major discount holidays like Black Friday and Cyber Monday because it measures quantities and does so in real-time • Lowest prices for TVs in 2015 were Thanksgiving and Black Friday • Data demonstrates retailers trying to start sales earlier – the Sunday and Monday before Thanksgiving saw low prices

22. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Measuring rapidly shifting consumer preferences 22 • Electronics see an average of 80% of online spend on new* products** • 16% 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

23. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. July 2016 Recap 23 MoM: July vs June MoM: July vs June Difference (percentage) Same Sign? YoY: Cumulative July 2015-2016 YoY: Cumulative July 2015-2016 Difference (percentage) Same Sign? DPI CPI DPI vs. CPI DPI vs. CPI DPI CPI DPI vs. CPI DPI vs. CPI Appliances -2.4% -0.8% -1.6% Yes -6.6% -2.6% -4.0% Yes Computers -1.2% -0.7% -0.5% Yes -12.8% -7.7% -5.1% Yes Domestic Hotels 2.3% -1.5% 3.8% No 2.2% 0.0% 2.2% Yes Flights -3.6% -8.5% 4.9% Yes -4.4% -4.8% 0.4% Yes Furniture and bedding -0.2% -0.5% 0.3% Yes -3.4% -3.0% -0.4% Yes Grocery -0.2% -0.1% -0.1% Yes -0.8% -1.6% 0.8% Yes Medical equipment and supplies 0.6% 0.3% 0.3% Yes -1.0% 0.0% -1.0% Yes Nonprescription Drugs 0.3% -0.5% 0.8% No 0.1% -1.6% 1.7% No Sporting Goods -0.5% 0.2% -0.7% No -5.4% -1.7% -3.7% Yes Televisions -2.1% -3.8% 1.7% Yes -20.2% -20.0% -0.2% Yes Toys -1.2% -1.5% 0.3% Yes -6.0% -9.3% 3.3% Yes

24. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. August 2016 Summary 24 • Main deflation in August: • Intl’ flights, Flights, Televisions • Main inflation in August: • Appliances, toys, furniture and bedding YoY MoM Appliances -5.7% 1.8% Computers -12.2% -0.4% Electronics -11.0% -0.5% Flights -3.2% -3.6% Domestic Flights -6.2% -3.4% Intl Flights 1.2% -4.3% Furniture and bedding -3.3% 0.2% Grocery -0.9% 0.0% Domestic Hotels 2.3% -2.1% Intl Hotels -2.8% -0.2% Medical equipment and supplies -1.3% -1.0% Nonprescription Drugs -0.3% -0.8% Sporting Goods -5.7% -0.5% Tablet -20.9% -1.3% Televisions -20.9% -2.9% Toys -5.6% 0.3%

25. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Appliances 25 • Adobe DPI shows cumulative deflation of -5.7% YoY (August 2015 to August 2016) • Main YoY price decreases for Appliances priced between $600 and $1000 • For August 2016, prices increased 1.8% vs July 2016 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. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Airfare 26 • Adobe DPI shows cumulative deflation of -3.2% YoY (August 2015 to August 2016) • For August 2016, prices decreased -3.6% vs July 2016 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable

27. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Airfare: domestic 27 • Adobe DPI shows cumulative deflation of -6.2% YoY (August 2015 to August 2016) • Main YoY deflation for flights Oregon, Illinois and Colorado • Main YoY inflation for Florida • For August 2016, prices decreased -3.4% vs July 2016 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable

28. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Airfare: international 28 • Adobe DPI shows cumulative inflation of 1.2% YoY (August 2015 to August 2016) • Main YoY deflation for flights to Europe and Africa • Main YoY inflation for flights to South America • For August 2016, prices decreased -4.3% vs July 2016 MoM METHODOLOGY: • The data used contains transactions for ~370 K flight routes • Includes associated fees, where applicable

29. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics 29 • Adobe DPI shows cumulative deflation of -11.0% YoY (August 2015 to August 2016) • Main YoY price decreases for Electronics priced between $200 and $500 • For August 2016, prices decreased -0.5% vs July 2016 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. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics: computers 30 • Adobe DPI shows cumulative deflation of -12.2% YoY (August 2015 to August 2016) • Main YoY price decreases for Computers priced between $1200 and $1600 • For August 2016, prices decreased -0.4% vs July 2016 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. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics: televisions 31 • Adobe DPI shows cumulative deflation of -20.9% YoY (August 2015 to August 2016) • Main YoY price decreases for Televisions priced greater than $2000 • For August 2016, prices decreased -2.9% vs July 2016 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..

32. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics: tablets 32 • Adobe DPI shows cumulative deflation of -20.9% YoY (August 2015 to August 2016) • Main YoY price decreases for Tablets priced between $350 and $550 • For August 2016, prices decreased -1.3% vs July 2016 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..

33. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Furniture and Bedding 33 • Adobe DPI shows cumulative deflation of -3.3% YoY (August 2015 to August 2016) • Main YoY price decreases for Furniture and bedding priced between $100 and $150 • For August 2016, prices increased 0.2% vs July 2016 MoM METHODOLOGY: • The data used contains transactions for ~173 K products • Products include interior and exterior furniture, mattresses and other bedding products

34. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Groceries 34 • Adobe DPI shows cumulative deflation of -0.9% YoY (August 2015 to August 2016) • For August 2016, prices increased 0.0% vs July 2016 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

35. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 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 2.3% YoY (August 2015 to August 2016) • Main YoY inflation for Nevada, Hawaii, Colorado and Tennessee • Only state showing YoY deflation is New York • For August 2016, prices decreased -2.1% vs July 2016 MoM

36. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 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 -2.8% YoY (August 2015 to August 2016) • Main YoY inflation for Oceania and North America destinations • Main YoY deflation for African and European destinations • For August 2016, prices decreased -0.2% vs July 2016 MoM

37. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Medical Equipment and Supplies 37 • Adobe DPI shows cumulative deflation of -1.3% YoY (August 2015 to August 2016) • Main YoY price decreases for Medical equipment and supplies priced greater than $135 • Main YoY price increases for Medical equipment and supplies priced between $0 and $10 • For August 2016, prices decreased -1.0% vs July 2016 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. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Nonprescription drugs 38 • Adobe DPI shows cumulative deflation of -0.3% YoY (August 2015 to August 2016) • Main YoY price decreases for Nonprescription Drugs priced greater than $40 • Main YoY price increases for Nonprescription Drugs priced between $0 and $10 • For August 2016, prices decreased -0.8% vs July 2016 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. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Sporting Goods 39 • Adobe DPI shows cumulative deflation of -5.7% YoY (August 2015 to August 2016) • Main YoY price decreases for Sporting Goods priced between $40 and $100 • For August 2016, prices decreased -0.5% vs July 2016 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.

40. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Toys 40 • Adobe DPI shows cumulative deflation of -5.6% YoY (August 2015 to August 2016) • Main YoY price decreases for Toys priced between $70 and $200 • For August 2016, prices increased 0.3% vs July 2016 MoM METHODOLOGY: • The data used contains transactions for ~249 K products • Products include toys, games as well as playground equipment

42. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online Job Seeking declines 42 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 14.9 % YoY in August • This is indicative of a strong labor market, with fewer people looking for jobs, which coincides with the government numbers

44. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Online housing search growth slows 44 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 up 14.2% YoY in August, which is not as strong as March-April, but is still a sign that search for housing remains healthy

46. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. June-July Official Government Statistics 46 • GDP growth: 1.2% (Q2) • Wages growth: 2.6% (YoY) • Consumer spending: +0.4% (June) • Unemployment: 4.9% (June) • Housing Sales: +1.1% (June) • CPI inflation rates (YoY): • All items: 1% • Housing: 3.5% • Medical Care: 3.8% • Gas: -15.4% • Commodities: -2% If you look at the growth rate of the US economy, it's only moderate -- there are a lot of international risks and there is no sign of inflation. While our long-run prospects are excellent, the next 12-18 months are likely to continue to have some significant bumps. - Austan Goolsbee

47. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 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 =

50. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Electronics Deflation in Detail • The average price paid for an iPad mini (all models) has decreased by about 40% since the iPad mini 1 was introduced in November 2012. • Although the initial price tag of new models remains constant at around $400, the automatic discount of previous models causes the average price to consistently fall: when the iPad mini 3 was introduced at an average price of $450, the price for the iPad Mini 2 was reduced by 25% to $300. • This data only includes iPad minis sold in retail websites

53. © 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. Job Seeking Online: Traffic Sources • Direct traffic to employment-listing websites is higher than search traffic • Search ranks second