(FORTUNE Magazine) – THE ECONOMY/ Cover Story

32 The Bright Future of Service Exports They will help make the U. S. competitive again. by Richard I. Kirkland Jr.

Fortune Forecast: 41 -- Surprise ! A Shrinking Federal Deficit 44 -- Productivity Puzzle

CORPORATE PERFORMANCE

48 Citibank Wows the Consumer Retail banking is fast becoming the only job that matters at the nation' s largest commercial bank. by Robert E. Norton

54 Companies to Watch

POLITICS & POLICY

58 Who' s Ahead in the '88 Money Race It takes cash to win the U. S. presidency. Pat Robertson and Joseph Biden have raised the most. by Ann Reilly Dowd

SELLING

71 Jewelers Woo the Working Woman Female executives aren' t waiting for men to buy them baubles. Ritzy retailers see a gold mine. by Susan Caminiti

PROFILE

76 The Man Asking Iranscam' s Tough Questions Champion litigator Arthur Liman is also the fellow who helped push Texaco into bankruptcy. by Christopher Knowlton

82 People to Watch

MANAGING

86 Helping Workers to Work Smarter Companies that invest in training reap huge rewards. by Michael Brody

THE WORLD

91 What Maggie Has Wrought Mrs. Thatcher has given Britons a sense of pride. That makes her a good bet for a third term. by Richard I. Kirkland Jr.

LOOKING AHEAD

94 Guess Which Fuel Is Looking Hot The U. S. abounds in cheap, clean, efficient natural gas. by Peter Nulty

TECHNOLOGY

125 Software Catches the Team Spirit New computer programs may change group work -- and finally make office automation pay. by Louis S. Richman

THE SERVICE 500

192 Flush Times for the Money Men Financial service companies cleaned up, as did S& Ls. by Edward Prewitt and Sarah E. Morgenthau

196 The Fortune Directory of the Largest U. S. Non- Industrial Corporations

4 The Editor' s Desk

8 News/ Trends GE shakes up Kidder, Allegis flies with Boeing, P& G' s too slippery wonder fat, discount flights to Europe, and more.

17 Letters to Fortune

141 Keeping Up by Daniel Seligman

149 Personal Investing Service stocks: long on sizzle, short on steak. by John J. Curran Thiokol could still lift off. High tech comes back. Portfolio Talk: Tudor Fund' s Melville Straus. 163 Books & Ideas On Japan' s victory in VCRs. by William Bowen

179 Office Hours How to give a speech. by Walter Kiechel III

185 Other Voices Women as corporate leaders. by Felice N. Schwartz

Victor Schrager gathered symbols of the 500 largest U. S. service companies for his cover photo. For their performance last year, see page 191.