(FORTUNE Magazine) – THE ECONOMY/Cover Story 52 HOW AMERICA CAN TRIUMPH The U.S. enters the 1990s bristling with opportunity. A world of increasingly shared power still needs leadership, and America remains the logical candidate to provide it. But that role will almost certainly pass to others if the U.S. fails to strengthen its economy. It must speed the growth of productivity, the engine of wealth, and eliminate the federal budget deficit. The result could be rising living standards, soaring profits -- and a real interest rate of 1%. Fortune lays out the policies for achieving such a future. by Louis S. Richman

COMPETITION 69 RETAILING'S WINNERS AND LOSERS War at the store will decimate merchants in the 1990s. Survivors will be narrowly focused, technologically advanced, and lightning quick to spot the trends. by Bill Saporito

80 LINDA WACHNER: TREATING THE RETAILERS AS PARTNERS

EUROPE 83 WHO GAINS FROM THE NEW EUROPE Almost everybody does -- and there's opportunity aplenty for deals. The combined GNP of East Germany, Hungary, and Czechoslovakia is bigger than China's. by Richard I. Kirkland Jr.

AUTOS 93 CAUTION: BUMPS AHEAD AT FORD Don Petersen is getting out at the top. Things are better than when he took over, but Ford's model lineup is showing its age. by Alex Taylor III

HEALTH 101 BEHIND THE BATTLE OVER CHOLESTEROL Some people with lots of the stuff live to be 90. Here's why experts disagree so noisily over what to do about it. by Stuart Gannes

104 A CONSUMER'S GUIDE TO YOUR LOCAL CHOLESTEROL FACTORY

108 THE SAFEST CITY FOR A HEART ATTACK

CORPORATE PERFORMANCE 120 COMPANIES TO WATCH Its stock has jumped, but some people still don't understand Primerica. by Terence P. Pare % Doing the right thing has failed to pay off for Cummins Engine. by Ronald Henkoff

Also: Kuhlman, Merry-Go-Round, QMS, and New Image Industries.

MANAGING 133 AN OUTSIDER FIRES UP A RAILROAD Mike Walsh taught a hidebound Union Pacific how to compete. by Andrew Kupfer

INNOVATION 148 PRODUCTS TO WATCH

MONEY & MARKETS 151 THE SILLY PUSH TO TAX STOCK TRADING Some surprising people like Lee Iacocca want to tax securities transactions. by Robert E. Norton

ENTREPRENEURS 157 TRUMP'S TROUBLES His newest casino-hotel could drain his other holdings of profits. by Monci Jo Williams

THE SOCIETY 164 STEPS TO HELP THE URBAN BLACK MAN The best solution for the problems of the inner-city poor: jobs. by John Paul Newport Jr.

DEPARTMENTS 4 EDITOR'S DESK 6 INDEX 8 NEWS/TRENDS Harvard Law's pro bono students, the networks' wild bets on sports, Congress and defense cuts, the Bordeaux of '89, how Japan diversifies: a reader quiz, and more.

33 FORTUNE FORECAST American businesses are looking beyond rotten 1989 profits and are investing in capital equipment for the long term. by Vivian Brownstein

39 PERSONAL INVESTING There are still industries that Wall Street expects will do well in 1990. by Ellen Schultz

Also: The king of beer stocks, tax tips for Christmas, and Portfolio Talk with Alden Stewart of Equitable Capital Management.

207 FORTUNE PEOPLE An American gets fired by Sony, Asea Brown Boveri's Percy Barnevik charges into the U.S. market, and more. by Alan Deutschman

213 OTHER VOICES Eight ways to end corruption in Washington.

219 LETTERS TO FORTUNE

225 OFFICE HOURS In picking a business school, don't be misled by magazine rankings. by Walter Kiechel III

231 KEEPING UP Silly talk about Communism, middle-aged delinquents, and other matters. by Daniel Seligman

ABOVE: A mass swearing-in of new U.S. citizens in Miami photographed by Carol Guzy/Miami Herald -- Black Star.

COVER: The American flag photographed by F. Seib -- H. Armstrong Roberts.