The survey also queried consumers on their impressions

The survey also queried consumers on their impressions of current economic conditions, and once again while things MBT Imara Sandalsstill look bad, they don't appear quite as awful as they did in April:

- 17% of respondents think the economy will improve in the next 90 days, which is notably 3-pts better than we saw in April. Even more striking, just 39% think the economy will worsen, a significant 11-pt improvement from a month ago.

- 29% say the current state of the economy is better than they thought it would be 90 days ago, while 21% say it is worse  MBT Sirima,than they thought it would be.

Where is spending improving? For the first time this year there is a slight uptick in consumer electronics sales, although spending in the sector is still very sluggish. There is also a 1-pt uptick in spending on consumer durable goods.

Notably, the overall uptick in consumer spending is being driven by an improved outlook among households earning more MBT Panda,than $100,000 per year.

But there are some very powerful undercurrents threatening the U.S. recovery, as the economic downside grows uglier.

The Bad and The Ugly

First, the spending outlook for households earning Less than $50,000 per year is extraordinarily depressed, with 61% saying they'll spend less over the next 90 days than they did a year ago - a whopping 6-pts worse than in our April consumer spending survey.

Secondly, among those who say they're spending less over the next 90 days, more than half (52%) cite Inflation as a reason - a 6-pt jump since April. Another 49% point to Higher Energy Costs - also up 6-pts from previously.

Other consumer concerns have increasingly taken a back seat to inflation. Perhaps most ominously, two-thirds of consumers report that due to increased energy costs their discretionary spending will be lower for the next 90-days.

Thus, we weren't at all surprised when Wal-Mart's latest earnings announcement showed better than expected 1st Quarter results -- with profits rising nearly 7%. Similarly, Costco reported an 8% rise in April same-store sales -- well ahead of the 6.1% consensus estimate.

In other positive news for the two retail giants, when consumers were asked where they expect to spend their economic stimulus tax rebate checks, Wal-Mart (12%) and Costco (12%) were the two winners among the major retail outlets.