Auto Sales are a significant component of consumer spending and serve as a good indicator of consumer confidence in the economic outlook.
Typically, auto sales data provide first-hand information about the strength of a country's economic cycle, often preceding the release of other personal consumption data. As such, auto sales serve as a good predictor for subsequent retail sales and personal consumption expenditure figures, with auto sales accounting for 25% of retail sales and 8% of total consumption. Moreover, auto sales can act as an early signal for predicting economic recessions and recoveries.
Regarding the impact on cryptocurrencies, a study by Liu and Tsyvinski (2021) titled "Risks and Returns of Cryptocurrency" published in The Review of Financial Studies explores the relationship between traditional economic factors and cryptocurrency returns. The authors found that cryptocurrency returns have low exposures to traditional asset classes such as stocks, currencies, and commodities. However, they did find that cryptocurrency returns can be predicted by factors specific to cryptocurrency markets, such as momentum and investor attention. While the study doesn't directly address auto sales, it suggests that traditional economic indicators like consumer spending may have limited direct impact on cryptocurrency markets. Instead, cryptocurrency prices appear to be more influenced by factors internal to their own ecosystem and by broader technological and regulatory developments. This research highlights the unique nature of cryptocurrencies as an asset class and underscores the need for specialized analysis when considering their place in the broader economic landscape.
