The Economy: Back-to-back recessions? Not likely.
Energy: New fuels from algae stoked on carbon dioxide.
State Budgets: State taxes loom; so, too, surplus sales.

The Economy
What are the odds of a double-dip recession? Relatively low, though we can’t rule it out.
The economic pluses outweigh the minuses. Consumers are now showing a willingness to spend, despite high debt levels and rising foreclosure rates. Their long-term history suggests they’ll keep it up. Confidence, rebounding smartly, will keep improving, helped by a 25% drop in gas prices after mid-July.

The biggest economic woes are behind us:
Banking. Some banks are raising capital and paying back taxpayers as credit markets recover. Lending remains limited but is beginning to revive.
Autos. Painful decisions have been made. The industry can now start to reinvent itself.
Inventories. Firms have cut to the bone. As consumer demand picks up, so will production. That’ll boost GDP and … eventually … employment.
Home sales. They’re climbing, albeit slowly, and a bottom in prices is six to nine months away in the hardest-hit markets. Housing will add a point to GDP growth in 2010, after subtracting a point in each of the previous three years.

Exports. They’ll rise, boosting the bottom lines of firms that sell overseas.
Still, the recovery will be lethargic ... subpar growth of only about 2% in 2010 and a bit more in 2011, well below growth after other deep recessions since the 1940s. Plus any financial or geopolitical shock to the system could easily derail a recovery. Even without a shock … a fragile economy, grappling with several recession hangovers.
Making it a challenge to build momentum for growth:
Unemployment. It won’t start coming down until the second half of 2010, after peaking at well over 10%. That won’t feel like a recovery to many workers.

Commercial real estate. The difficulties started last year, but the dive has gotten steeper. There’s a ripple effect, creating problems for many. As more leases expire, renters will demand big discounts to stay where they are. And new construction will stay mired in the doldrums.
State fiscal crises. Lawmakers will struggle with budgets, raising taxes and laying off workers. That’ll slow spending by consumers and businesses. The stimulus helped some, but not enough to get states out of their fiscal binds.
Business investment. It will shrink in 2010’s first half. Companies will move cautiously, delaying major projects till they see stronger GDP growth. That may take a while.

Energy
One fossil fuel that’ll probably benefit from coming carbon emissions caps:
Natural gas. Because it burns much cleaner than oil or coal, natural gas leaves a smaller carbon footprint. Many firms … companies with fleets of vehicles, manufacturers and even utilities … may find it cheaper and easier to make the switch than to meet likely new curbs by sequestering carbon dioxide or buying carbon credits.
Odds are prices won’t skyrocket, though. Advances in extraction technologies mean supplies should be plentiful for years to come, but storage is a bottleneck.
Another promising route to lower carbon emissions for big energy users:
Making biofuels from carbon dioxide. At least a dozen firms across the U.S. are working on technologies to use the gas, now spewing out of factory smokestacks, to supercharge algae growth. The plants are natural biorefineries, feeding on the CO2 and producing an oil that can be used to power the factories and generate electricity, as well as to fuel automobiles and aircraft. Commercial production is a few years off, though Calif.’s OriginOil, Solazyme, and others have pilot plants in the works. And Continental, Virgin Atlantic, and Japan Airlines are testing algae based jet fuels.

State Budgets
Brace for a slew of tax hikes on the state level July 1, when a new fiscal year begins in most states. There’ll be plenty of layoffs, furloughs and cuts in spending, but no state can balance its budget without boosting revenue, too. Some states raised taxes earlier this year but still can’t balance their budgets. Calif., for example, increased sales and income taxes, but a huge shortfall remains. Dozens of other states are in trouble as well, and most are planning tax hikes:
Colo. will end a capital gains deduction on all in-state business assets, cut payments to retailers for collecting sales taxes and boost hospital provider fees.
Hawaii will add three new income tax brackets and raise the motel room tax.
Iowa is adding a fee on divorce filings and real estate transfers.
Maine will expand its sales tax to cover amusement parks, sporting events and some services, including auto repairs, car washes, dry cleaning, and plumbing.
N.Y. will also tax some services … limousine rides and hair salon care, for example. N.Y. couples who make more than half a million dollars a year will pay higher income taxes, as will singles who earn more than $200,000 annually. Million-dollar filers will also face limits on itemized deductions on state returns.
Nev. will raise its sales tax from 6.5% to 6.85% and hike business taxes.
Va. is expanding its corporate tax reach to include income from REITs.
Lots more, too. Many states will increase tobacco and alcohol taxes and fees on vehicle registration and other services. Others will reduce green energy credits.
Another way states are boosting revenue: Selling surplus inventory. Some of it is up for grabs at a deep discount, while other items are auctioned off.
What’s for sale? Almost everything, from machinery to valuable real estate. Priced at a steal and often in excellent condition are forklifts, tractors, cranes, buses, boats, cafeteria equipment, fuel pumps, garbage trucks, and electrical equipment.
Many states list items online. Or try a useful private site, www.govdeals.com.
One bright spot for states: A $4.35-billion pot of federal education money.
States must compete for grants by showing the Education Department that they have innovative ideas for improving performance and a track record of successful implementation. Education Sec. Arne Duncan is looking for new ideas, but funds will also go to charter schools and teacher pay-for-performance programs.
A chunk of money will go to states so they can establish rigorous tests to gauge whether students are ready for work or college. Most states are teaming up to work on a common set of measures, rather than choosing to go it alone.