The U.S. economy is falling into Europe’s footsteps

What the Ice Cream Scooper Told Me in Venice

by Michael Lombardi

I’m blessed to be able to travel to Europe once or twice a year. I use the trips as an opportunity to see how the economies are faring over there. And I can tell you this first-hand: the economic situation in Europe is much worse than what we’re hearing from the mainstream media in the U.S. economy.

Here’s just one small story that paints the picture…

A couple of weeks back, while in Venice for four days, I walked into my favorite ice cream store for my daily fix of Italian ice cream. I’m chatty wherever I travel, as I want to get the locals talking so I learn what’s going on.

After engaging the store’s only employee in conversation (I’m fluent in Italian), the young man, who was between 25 and 30 years old and educated, told me how happy he was to have his job as an ice cream scooper at this particular location of a well-known chain of Italian ice cream stores. “Jobs in Italy are very hard to come by,” he told me.

But what he said next really got me thinking … 

The ice cream scooper said he travels 65 kilometers (that’s about 40 miles) each way to and from work each day. He takes the train. Total travel time is four hours a day; two hours in the morning to get to work, and two hours at night to get home from work. Yes, four hours a day to travel to a job scooping ice cream for tourists.

When I asked him about getting a job closer to the town he lives in, he says there are no jobs to be had. When I ask him about moving closer to his job to cut down on the commute, he says he can’t afford the higher rent.

The discussion had an impact on me. If you are a long-time reader of this column, you have read how I believe the U.S. is headed for the same fate as most eurozone countries: there is no middle class, only the very poor and the very rich.

And it’s already happening in the U.S. economy…

According to a report by the Economic Policy Institute on CEO pay in America in 2012, a CEO’s pay was 202.3-times greater than a typical worker’s—the highest level on record. (Source: Economic Policy Institute, June 26, 2013.)

What’s happening to the average Joe’s income in the U.S. economy? It’s dwindling; he’s earning less. In 2012, median household income in the U.S. economy was $51,017 adjusted for inflation. Back in 1999, median household income was $56,080. (Source: Federal Reserve Bank of St. Louis web site, last accessed November 11, 2013.)

Hence, is it any wonder the number of Americans using food stamps remains staggeringly high in the U.S. economy? As of August of this year, there were 47.6 million individuals or 22.9 million households in the U.S. economy using some form of food stamps. (Source: U.S. Department of Agriculture, November 8, 2013.)

If the number of individuals using food stamps in the U.S. economy were a nation, it would rank between Spain and Colombia in size! The U.S. Department of Agriculture food stamp program hit a cost of $74.61 billion last year! (Source: U.S. Department of Agriculture, November 8, 2013.)

And the poverty rate in the U.S. economy continues to rise. According to a supplemental poverty measure (an alternative measure of calculating the poverty rate) by the U.S. Census Bureau, the poverty rate in the U.S. economy stood at 16%, or  49.7 million people, in 2012, essentially unchanged from 2011. If there were no Social Security benefits, the supplemental poverty rate would have been 24.5%! (Source: U.S. Census Bureau, November 6, 2013.)

The U.S. government and the Federal Reserve have exercised extraordinary measures to spur economic growth in the U.S. economy. The government has spent an enormous amount of money. In the fiscal year 2013, the U.S. budget deficit was $680 billion, and our national debt has skyrocketed to $17.0 trillion. The Federal Reserve continues to print trillions of dollars in new money monthly and has kept interest rates artificially low for years. But these measures have not curtailed the trend of lower after-inflation incomes and rising poverty in this country.

Given what’s going on in America…given an economy that is much weaker than what the media tell us…I personally believe the Federal Reserve will not be able to pull back on money printing for months, if not years. The U.S. economy is falling into Europe’s footsteps. Rome, too, thought that it could help its citizens by printing more and more coins and paper money not backed by anything of substance. It led to the fall of the Roman Empire. Sadly, “America the Great” is following in the same steps.