The Economy: A recovery is definitely underway, but slowly.
Energy: Nations jostle for claims on Arctic oil and gas reserves.
Autos: Think electric cars are far into the future? Think again.

The Economy
There’s no doubt the economy is improving.
For a few months, it will feel pretty good: Consumers’ and business managers’ spirits buoyed by the 3.5% annual growth rate for the third quarter and continued gains in the fourth, raising hopes that layoffs are over and net job gains are closer.

But by early spring … a test of the recovery.
And of the health of the credit system, 18 months after it teetered on the edge of collapse.
Not to mention the Federal Reserve’s skill, as officials try to keep nurturing the credit market with low rates, without providing so much slack for so long that a new financial bubble develops.

Several upward forces are at work:
A federal stimulus that’s priming the pump and will continue to do so through next year. The jobs created will lift consumer confidence.
Inventories that will need more replenishing. Already, demand has factories starting to hum again.
Exports ticking up, helped by the soft dollar and overseas economies beginning to pick up steam.
Low interest rates that encourage would-be home buyers to take the plunge and companies to sell bonds, raising money for investment in plants and equipment. Odds are slim that Fed policymakers will hike rates before the middle of next year.
A pickup in housing construction. Between attractive interest rates and a likely extension of the first time buyers’ credit, new-home starts will keep rising.

Unfortunately, there are also some powerful downward pressures:
Commercial real estate in a slide. On a national average basis, property values have dropped about 35% over the past two years and are still falling.
Credit markets that remain far from normal. Lending backed by mortgages on homes, offices, and shopping centers, for example, is still in the distant future. And banks remain leery of lending to small firms, especially those tied to housing.
Unemployment that’s headed into double digits by early next year and likely to remain only modestly lower than that through much of 2010. Rehiring of the 7 million workers who lost their jobs during the recession will be slow, and the paychecks for many who find employment will be smaller than they had been.
And a worsening outlook for mortgage defaults and foreclosures. That’s sure to push average home prices even lower … probably an additional decline of about 10% before leveling off at midyear. And it may do even more damage … a steeper price slide snuffing out the construction upturn and slamming the brakes on consumer spending.

At best, it will be a slow recovery. For a while, the relief at seeing the tail end of the recession will act as a tonic. When that wears off, the patient will still be weak.

Energy
A cold war … literally and figuratively … is brewing over huge energy reserves. The U.S., Russia, and Canada are jostling in the frigid Arctic to stake claims to develop what may be the world’s largest untapped supply of oil and natural gas.
Up for grabs: About 90 billion barrels of oil and 2 trillion cubic feet of gas … about 25% and 30%, respectively, of the world’s undeveloped reserves of the two fuels.
The three nations plus Denmark, Iceland, and Norway are hoping to lay claim to big stretches off their continental shelves before the UN Law of the Sea pact kicks in late next year. Once it does, it will be tough for any country to legally challenge claims.
A rapid melting of ice in the Arctic has made the reserves more accessible. Already, U.S. and Russian ice cutter survey ships are crossing each other’s paths to do sonar mapping. And Russian submarine exercises in the Canadian Arctic prompted Ottawa to stage maneuvers in the area. The war of nerves will heat up in the spring, when Russian paratroopers hold training exercises in the region.

A dividend for business in the smart grid push: Lower overall energy costs.
Look for utilities to offer businesses a wider array of ways to lower costs if they sign up for programs that let power companies cut the electricity they supply when demand is high. New technology will also let firms use power more efficiently.
Utilities, in turn, can expect smaller carbon footprints. The stimulus grants announced with huge fanfare will help them track and plan for peak energy periods. New technology will provide feedback on use and remote control over power supplies.
Smart grids, by evening out demand, will cut use of coal fired generators, which spew carbon dioxide and are big targets of regulations under consideration.

Autos
Think an all-electric car is out of your budget range? Maybe not.
A $25,000 model from U.S. upstart Aptera Motors will be out by year-end. You’ll know it when you see it … a bullet shaped three-wheeler about the size of a Toyota Prius. The range: 140 miles. Buyers have already put down deposits on the first 4,000 to come off the assembly lines. Those orders will be filled by August.
It’ll take a year or so longer for GM, Nissan and Toyota to produce plug-ins, and they’ll cost more and have shorter ranges. General Motors’ Chevy Volt, for example, will sell for $40,000 after rebates and will go only 40 miles per charge.

Finding a handy charge for your plug-in will be a problem for years.
But there is progress. About 14,000 quick charging kiosks by AeroVironment have already been installed at industrial sites and airports, with thousands more to come later at service stations and fleet depots. They’ll charge a battery in as little as 10 minutes. Slower, four-hour charging stations from Coulomb Technologies will be placed in apartment buildings, offices, shopping centers, and parking garages.