an animal that isn't a primate and first time they talked to a dog without bacon, "inside story" is next. check us out 24 hours a day at aljazerra.com. we're borrowing again to buy stuff. didn't we get into big trouble from too much borrowing just a few years ago? this time it's good news, or might be. that's the inside story. ♪ hello, i'm ray suarez. we have just come through some years in which households, that's you and me, borrowed

less, and paid down a lot of debt, good for you. and as it turns out not so great for the wider economy. as you repair your family balance sheet, the auto workers, and those who make, houses, cars, and tvs, were all waiting for you to come through the door. credit card balances are a little more under control. home equity credit lines a lot more so. are the latest stats that show an increase in borrowing good news? indicating that americans are ready to spend again? or is it continued weakness? let's start this inside story with a look at the numbers. americans borrowed more than $11.5 trillion during the last quarter of 2013, the highest

amount since the end of 2007. according to the and it willest report from the federal reserve bank of new york, more americans started taking on household debt again, buying homes, cars jrg and educations after years of recession. compared to the same quarter in 2012, almost each credit line saw an increase in for lowing. for mortgage debt the total amount borrowed was 8.05 trillion, compared to 2012, it was up $16 billion? student loans, the total amount borrowed in 2013's fourth quarter was 1.08 trillion. debt in auto loans $863 billion of debt was recorded in the last quarter of 2013. that's $80 billion more than 2012's last quarter. for credit cards, 2013's fourth

quarter stood at $683 billion, compared to 2012, it's $4 billion more. and in home equity credit, a particular villain in the run up to the recession, the total fourth quarter number was $259 billion, compared to 2012 it was down $34 billion. this week's positive numbers compliment the latest consumer confidence survey taken in january. the survey says confidence is now up over 3 points, a sign the economy may gain momentum soon. the announce suspect a welcome new to the u.s. federal reserve. they have kept short-term interest rates purposely low. it's a strategied called quantitative easing, a bond buying program bumps money into the economy as stimulus. as other positive signs come, like increased borrowing and

confidence, janet yellen says the fed will likely taper. >> the purpose of quantitative'sing, we have been longer term treasury securities, the objective has been to push down longer-term interest rates, and i believe we have succeeded in doing that. the purpose is disburse spending in the economy and to achieve more rapid economic growth. >> investors say the fed will most likely not increase rates until 2015. the newly announced debt comes with baggage, though. during each month of 2013's fourth quarter, the average savings rate decreased. also some debt like student loans could hamper economic recovery. strapping young people where huge debt early on lowers their chances of buying homes. those borrowing for mortgages in

2013 were people with great lines of credit, averaging credit scores above 720. the same goes for credit card debt solid scores meant more borrowing. this is flip flopped from trends in 2006 when people with bad credit were the ones more likely to borrow. ♪ so what does this all mean for the u.s. economy broodly? and does the economy look different to people in different regions of the country? to racial and ethnic minorities. joining us is economist and author, economic contributor at color line magazine, and director of global and u.s. consumer markets for ihs global incite. and chris christopher when we

look at housing spending up, spending on tuition and cars up, and home equity credit borough down, isn't that a good picture? >> there are some good signs, but household median income is not doing very well, and still about 7% below where it was. so what we saw in 2013 was relatively okay consumer spending numbers, but real disposal income actually grew as a measly 0.6 to 0.7%. basically because the payroll tax expiry took 2% out of people's wages. >> so what do we make of the numbers? >> the things that concerns me the most is the tuition number. i saw how many folks simply could not afford tuition. the change of the parent plus loan put a lot of people at a

difference. the average for african-americans is about 31,000, while the white number or the overall number of 51 has gone up by a little bit. that means that african american young people who's parents can't afford to pay their whole tuition, tuition and h bcu runs about 20, $22,000, so you are putting more young people of color at the periphery giving them less access in the future for good jobs. the jobs numbers are also of concern. we have seen the unemployment rate tick down, but we never look at number 1 the employment population ratio, what percentage of the pop ration is actually working, that has been level for white men, but going down for african american men, so what you find out is unemployment rate is a partial

measure of what is going on. then you look who got income gains? the top 1 to 5% saw their incomes go up. the bottom 95%, 99%, about the bottom 95%, the middle saw level, and the bottom literally saw some erosion of their wages. >> couldn't you argue the tuition either way, yes, it is more debt, but it also means that people have enough faith in their future to invest in their future? it's not just money that disappears into the ether can but result down the road in real returns for individuals? >> the challenge is who can access loans to afford to go to college. i would be the last one to argue that investment in college education is a waste money. but young people of color, african-americans and latino's who's parents don't have the

income have less access. with parent-plus loan they used to judge you on your credit scores, and you had a solution. get your credit score up, and your parents get the loan. now it's based on the number of your lates -- the number of times you have had a late payment. so the number of lates is a short-run number, and the credit score is a long-run number. and clark atlanta university lost 500 students, the entirety of the hcbu population lost 15,000 students. not only did young people lose opportunity but many of these colleges have found themselves in economic trouble. yes, if you have the dollars, tu situation a great investment. i had students drop out of school after the second year because they just didn't have the money. >> and it's not a question of one glass that is half empty or

half full. we have a huge row of glasses in front of us, and some of them are a little bit full, some are almost empty. how do you look across all of the different metrics, and come up with an idea of how we're doing? >> i think that's exactly what you have to do. you have to look across the data that is available to get a picture of what is going on. and what of the things that happens a lot is we latch on to one specific number and either break out the pompoms or break out, you know, the shot glass to get through it, and i think that -- what is interesting from my perspective when you put all of the data together you see an economy that is very broken, very weak and moving sideways, so if we take one example and that's the one you started on, on the increase in consumer borrowing, on one hand that's great for possibly all of the

reasons that you laid out, but most of that borrowing as was detailed is from those who already have really strong balance sheets. strong credit scores, most likely that reflects the fact of one of the underlying trends in our economy which is the fact that 90% of the gains in economic growth since 2000, $3 trillion added to the economy have gone to the top 1%. and that is where housing prices are reboundinger, and that's where we have seen the economy be able to grow. when you actually look at what is happening for average people, the fact is that wages are at a 40-year low. the median income has not recovered from before. housing prices, we have had over 4 million people lose their homes so their balance sheets

are destroyed. one of the ways in which the housing market has recovered is wall street has created billions of dollars of funds to buy those homes that were foreclosed on and are now turning around and renting them to people. that's one of the things that is increasing the surge, so when you look below the headline the economy isn't doing well, and that's because a lot of these metrics were for a different time, a time when we had an economy that worked for everyone and be able to look at the unmroim number or look at the consumer debt number, and say this is generally what is happening for everyone. but the economy has so unhinged, we have had such a separation from people at the very, very top from everyone else that we actually have to look at paragraph two and three of what is going on to see what is

happening, and it's not particularly hopeful in my estimation, and it's one of the reasons why there's continued distress amongst familiar list. it's one of the reasons why people continue to believe that their children won't do as well as they are, and that's because of real world experiences where these flash in the pan, goods line, good top line headlines in economics are not actually translating to where most people live their lives, and that's because we have so rewired the economy in a way that is going to take dramatic action to turn it around. >> chris christopher what that idea that a new dollar of economic activity to heavily gets distributed up the ladder? >> it is very difficult if you just use gdp. the devil is in the details. and when you look at the chain stores, luxury is doing well,

and discount stores, but the middle tier is suffering. and that's not really reflective in gdp, in addition as mentioned before it's only the top 5% of the income brackets that are sort of gaining income, and there's -- you know, if you ask any retailer, middle tier, or discount paychecks are important. and if the you add some of these anecdotal stories, then it sort of paints a wider and better picture. >> we're going to take a short break right now. and when we come back, we'll talk more about what a healthy recovering economy would like in 2014. and what some of the latest numbers tell us about how close we are to getting there.

with welcome back to "inside

story." i'm ray suarez. americans borrowed more at the ebb of last year than at anytime since the great recession began, more for mortgages, cars, student loans, and credit cards. we're talking about consumer debt and what it says or doesn't say about the state of the economy. and one of the great accomplishments of the american economy was to lift seniors in the main out of poverty. but you are seeing disturbing signs. >> well, janet yellen and ben bernanke did a great job of doi doing -- expansion than the government did. they september interest rates at about 1 to 1.5%.

for people who are in their late 50s, early 60s, that means they are getting a very low return on investment for money they are saving for their retirement. many don't have enough money anyway, but when you are getting such a return, this scars your ability to retire safely. and this is a sandwich generation. they are helping their kids, helping to support their elderly parents, and so what is left for them. and they also have these boom rang kids who come back. the average young person who graduates has about -- nearly $30,000 in debt. but since about 30% have no debt, these are the children of the wealthy, that number looks more like $50,000. first field job can be very low. so you are going to stay home and your parents will be helping you.

and so someone who is 55 and has an almost of even a hundred thousand dollars is spending something on their kids and something on their parents. and this really bodes poorly for the next generation, especially when you see young people resisting the notion that they are going to continue to tribute to social security. they have been scared enough that it is going away, and they are resistant to it. so we may be 70, and the folks that paid high tuition are now going to be responsible for us? i don't think so. >> so is that a regraying of the economy in the next 20 years? >> yes, clearly that's the case. and with the student loan debt this very weak and anemic recovery, you see the younger generations are suffering quite a bit. they are waiting longer to get

married, that means when they have children they will be older, so the problem will exacerbate itself. >> so to a certain extent are we looking at the bottoming out of a cycle that isn't going to have a rebound. we got used to the idea there are good times, you have bad times, and then they get good again. is the new normal a not so good return? >> i think that's possible, because we haven't done the things necessary in the last six years to be able to retool the economy. and one of those things is to k fix the inequality and get the economy working for everyone and that is not happening. so because we haven't taken advantage of the moment we were in, it's hard to see how we'll be able to return to the type of growth that we're used to, and that has a lot of implications for young people and for older people and everyone else.

>> chris did people get better habits during this last terrible time? i heard the savings rate went up. people stopped using their homes, those who weren't under water, as a source of ready cash. i mean there were some good things going on in a macro sense, weren't there? >> yes, there has been a change in behavior. people are waiting longer to -- to buy that car. so automobile units are doing relatively well, and we expect them to do pretty well in 2014 as well. so they are being a little bit more conservative. they are not rushing to get into the new house. they are a little more careful when they buy things. if you look at the retail sales number by certain channels, things follow in a fit and a start. so people hold back and then they splurge. if you have a good auto month,

you don't have a good discretionary spending month. and people are not breaking out the champagne, if they have extra money they'll splurge a little bit, but for the whole part everyone is very careful. >>, you know, during the last stretch of years the latino population lost two-thirds of its portfolio wealth. that's a shocking statistic. when we come back after a short break, we'll talk more abthe losses sustained during the great recession, and how we build back and get back to a functioning economy again. this is "inside story."

welcome back to inside story. i'm ray swarez. welcome back to "inside story." i'm ray suarez. the american economy is still waiting to take off f after years of steady if slow growth following the great recession. as i mentioned the latino population lost two-thirds of its wealth during the great recession. and a lot of that came from the exposure to the housing market which was cratering in a lot of the areas where latino families

lived and in the industries where a lot of the workers were building those houses. are these long-tail losses, ones that will take an awful long time to build back? >> they look like it. and both latino, and african american wealth are the lowest on record. we have not had a time since we have been keeping records that black and latino wealth are as low as they are now. and that's the direct result of the housing crisis, and other factors of the economy that exposed those communities more to the hazards that were faced recently, and they are long tail tailed. and we can see that from unemployment rates in those communities. african american unemployment raid is in the double digits, and latino unemployment rate is almost 50% higher than what is the case for the general

population that is recorded. if you look at what is happening in terms of black and latino youth unemployment. that's an even more dire picture of what is going on. so these are generational consequences, and usually what happens is that if these things are going to turn around in a recovery, they are sort of a v-shape, so it's going to be a prolonged claw back for those communities as a result. >> and unprecedented numbers of households with no net wealth at all, but that means resources that can't be tapped to build an addition on a house, start a small business, how do you come back from that? >> it's very difficult, but some have come back. about 95% of whites ages between 45 and 65 have seen their assets come back since 2008. for asians it's almost even.

but for african-americans and latinos, and whatever reason we are lumped together -- i love it when the census decides we're all the same, but for our group it's just half of what we were. so part of it is the asset mix. fewer than a third of african-americans invest directly into the stock market. they have a mutual fund or something like that. about 70% of whites have invested in the stock market. and homeownership, almost -- is it 70% or 73% of the white population owns their homes. most middle class people, the way that their wealthment co -- wealth comes from is their home. for african-americans the number of homeownership is just 48%.

so again, less you have access to. and part of homeownership you have seen people refinance to pay tuition and other things. and some folks don't have it with this underwater crisis. you have had people selling homes who really should have been next door to a jail. you had people who are were using false terms getting people to sign on the dotted line, and they didn't know what they were signing for -- about a third of african-americans and maybe 40% of latinos got sub prime loans because of who was vending the loans to them. >> chris christopher, we have got most of 2014 still stretching out ahead of us. do you like what you see even if the numbers aren't great? are they at least trending in the right direction? >> well, they are sort of trending in the right direction, however, the unfortunately thing is the weather.

if it's the drought this california or the colder weather in the northeast and snow storms in the south, it has put a damper on things. and right now what a lot of macro economists are trying to do is trying to -- what is the signal? what is the noise? and what is the weather effect? is it our opinion here that after february, maybe march, maybe the beginning of the second quarter things will pick up again, and we'll get a nice little bounce basically due to the weather effect. >> i guess the best we can hope for is spring comes soon, and it warms up all over america. thank you all. that brings us to the end of this edition of "inside story." thanks for being with us. the program may be over, but the conversation continues. we want to hear what you think about the issues on this or any day's show. you can log on to our facebook

page or twitter. we'll see you for the next edition of "inside story." in washington, i'm ray suarez. ♪ hell come and welcome to al jazeera america. i'm del walters. these are the stories we are following for you. a deal is in place and signed the ukrainian government and opposition hammering out an agreement to end the violence. lifting a major american city out of bankruptcy. how do you do it? detroit unveils its plan. ♪