It's about the income statement. Underwater homeowners have difficulty refinancing, and therefore are often still paying mortgage rates from the mid-2000s. Include taxes and insurance, and quite often homeowners are saddled with monthly payments of 40-50% or more of their disposable income (not to mention the plethora of interest only/option ARMs that have reset). This has a huge effect on how much discretionary spending a household has. Most households in the U.S. do not have that much discretionary spending to begin with - 20% of income or more is a big number (see any Consumer Expenditure Report by BLS)
The second issue is that after every recession, economic agents need to repair the financial damage done. 401k's and other assets had to be cashed in, credit card balances increased, people borrowed from family members. Often, a job loser who finds employment is working for 70-80% of their previous salary. If the new employment itself is tenuous, it is unlikely the individual is likely to go on a spending spree.
These are the main reasons why recoveries in general are gradual and not as fast and steep as the recessions, and why this recovery in general has been slower than most. - ts
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