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Consumer spending split between haves, have nots

Patrick T. Fallon | Bloomberg | Getty Images; Tiffany

America is becoming a country of two consumers.

For the most part, U.S. households are in a spending mood again, helping to drive a faster recovery from the Great Recession. Strong gains in personal spending got much of the credit for the solid 3.2 percent rise in gross domestic product reported by the government Thursday.

But not all households are joining the shopping spree, as retailers serving the lower end of the income ladder report intense profit pressure as they slash prices to maintain foot traffic.

The latest evidence came from Wal-Mart. The world's largest retailer extended a series of profit warnings to investors Friday, saying that earnings may be lower than expected—perhaps much lower.

(Read more: Wal-Mart adds to gloom, guides 4Q earnings lower)

The announcement followed similar profit disappointments from deep discounters after they slashed holiday prices to avoid getting stuck with unsold goods. Despite aggressive promotion, Family Dollar's same-store sales fell 3 percent last month.

There are other reasons for Wal-Mart's profit stumbles, including intense competition from other store chains catering to price-conscious shoppers. But all retailers selling to the highly budget-focused face the same pressures.

While consumer spending overall rose more than expected in December, income growth remained flat and, after adjusting for inflation, fell two-tenths of a percent. That pattern of stalled wage growth—unchanged since the Great Recession ended—is hitting people at the lower end hardest.

"It's pretty hard to buy more goods if your spending power is going down," said Joel Naroff, chief economist at Naroff Economic Advisors. "And the people that Wal-Mart is attracting—the lower- to middle-income households—are the ones whose incomes have been going nowhere."

(Read more: Economy's sticky problem: Older and jobless)

Cash-strapped households are also returning to a reliance on credit and dipping into savings to maintain their spending. In December, the savings rate—the percentage of disposable income households are socking away—fell to an 11-month low of 3.9 percent, versus 4.3 percent in November.

Meanwhile, consumer credit has been rising again after a major contraction following the housing bust. Driven heavily by a boom in car loans, consumer credit was up 5.9 percent in third-quarter 2013, according to the latest data available.

Households have also adjusted spending after the blow from last year's budget-balancing payroll tax increase, which clipped about $25 a week from the average paycheck. That puts working families in that much better shape than those still struggling to find a job.

(Read more: US consumer sentiment dips in January)

The "payroll tax increase had a much bigger impact on total household income than any reduction in jobless benefits and food stamps," said Paul Ashworth, an economist at Capital Economics. "But the payroll tax only hit people who have jobs in the first place."

And while the official unemployment rate is gradually declining, many households have simply fallen off the government statisticians' radar.

People who give up looking for a job are excluded from the official workforce count and no longer show up as officially "unemployed" in the monthly data. If they were added back to the workforce—a number that would reflect the prerecession share of the total population—the jobless rate would be over 11 percent.

And those officially counted as unemployed have been out of work on average for much longer than at any time in the last half century. That means many have exhausted jobless benefits, personal savings and other means to support spending.

By CNBC's John Schoen. Follow him on Twitter @johnwschoen or email him.

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