After a long winter, spring is in bloom. So is the economy. People are going back to work. Wallets are opening again. Dollars are zipping from hand to hand like honeybees pollinating an orchard.

And the fight for many of those dollars is shaping up as another round in the epic battle between two retail giants: Wal-Mart Stores () and Target ().To some, their tale is the story of the recession — which, it’s fair to say, Wal-Mart won. Early in the downturn, as consumers switched to discounters for inexpensive food and cheaper goods, Wal-Mart’s stock rose more than 50%. As more upmarket stores took a hit, Target’s stock lost more than 60%.

But we’re at a turning point. Fearful that consumers will move back upscale, Wal-Mart is focusing on spiffing up its stores while maintaining a price advantage over Target. Meanwhile, Target is touting more-fashionable offerings by telling customers to “expect more, pay less.”

Investors are clearly betting on Target. Since March 2009, when the market rebound began, Wal-Mart has been trading sideways. Target’s stock has risen 138% in 13 months.

At the turn

But has the market picked the right horse? So far, it would seem so. In the fourth quarter of 2009, for the first time since the recession began, Target enjoyed better sales and customer traffic numbers than Wal-Mart did.

Target saw a 2% boost to customer traffic during the fourth quarter, while Wal-Mart suffered a slight decrease. Same-store sales also fell 1.6% for Wal-Mart’s U.S. business; Target saw a 0.6% increase. These numbers have fed the notion that consumers who traded down are trading back up. Target seems to have momentum: Management recently increased first-quarter earnings projections based on strong sales.

We’ll find out more when Target reports quarterly results Thursday; Wal-Mart reports Tuesday.

That notion explains why Wal-Mart has basically been left out of a historic market move. From the March 2009 low to the mid-April high, the Standard & Poor’s 500 Index () sold a million iPads in just 28 days. Domino’s Pizza () posted a huge 14% jump in sales in the first quarter, which ranks as one of the largest-ever quarterly same-store jumps recorded by a fast-food chain. And the new “Iron Man 2″ movie sold $134 million in tickets in its first weekend, ranking it as Hollywood’s fifth-biggest opening ever.

Overall, nominal consumer spending in the first quarter has already passed its 2008 peak, and it is now on track to move further into new territory.

Sure, the data aren’t universally strong. Initial weekly jobless claims remain troublingly high with about 450,000 people filing for new unemployment benefits each week. The housing market could weaken with the May 1 expiration of the homebuyer tax credit. The number of food stamp recipients continues to move to new highs. And the ISI Group’s surveys of retailers have started to show a weakening in sentiment over the past four weeks.

But these trends are offset by strength elsewhere.

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