(FORTUNE Magazine) – THE ECONOMY/COVER STORIES 32 WHAT WILL LEAD TO RECOVERY Look first to business spending, not to consumers, whose behavior may be undergoing a sea change from the 1980s. And while the upturn will get off to a quick start, it will be subdued. by Todd May Jr. and Joseph Spiers

38 YES, YOU WILL BE ABLE TO BORROW Contrary to what you've heard, most banks have money to lend and the will to lend it to sensible borrowers. A credit crunch won't strangle this recovery. by Vivian Brownstein

41 IS THIS BULL REAL? A growing number of top money managers say yes, run with it. But beware: There are plenty of pitfalls. by Louis S. Richman

EXECUTIVE LIFE 44 WHERE PEOPLE LIVE BEST Not in Paris or Tokyo. For upper-middle managers, the world's most luxurious lifestyles are in Omaha, Atlanta, and other U.S. cities where houses are huge and malls crammed with bargains. But there are trade-offs: American managers are far more likely to be fired, and companies and governments overseas provide more lavish benefits, from pensions to university tuition. by Shawn Tully

THE WAR 57 GERMANY & JAPAN: MISSING IN ACTION Why have the two big powers been dragging their heels in providing help in the Gulf, despite international jeers? What do they stand to gain -- or lose? by Christopher Knowlton and Carla Rapoport

MANAGING 62 PEPSI KEEPS ON GOING AFTER NO. 1 Scrapping with Coca-Cola has produced a company with an attitude -- and record profits. Now it's taking on and shaking up McDonald's, another market leader. Pepsi is on its way to becoming one of the world's best consumer products companies -- maybe even the best. by Patricia Sellers

70 A USER'S GUIDE TO FAST-FOOD DINING

SELLING 72 IKEA'S GOT 'EM LINING UP Low prices, clever layout, and a squad of babysitters are helping this cheeky Scandinavian furniture and housewares retailer buck the recession as it launches stores in the U.S. by Bill Saporito

INNOVATION 76 PRODUCTS TO WATCH % The world's smallest fax, Sony's audio cassette designed to take the heat in your car, Weight Watchers lite, and more. by Stephanie Losee

MONEY & MARKETS 79 TOUGH BIRDS THAT QUACK LIKE BANKS George Bush wants to let industrial companies own banks. Should that frighten borrowers? Look at how IBM, GE, and other giants run huge finance operations now. by Terence P. Pare

COMPETITION 86 DESIGN THAT SELLS AND SELLS AND . . . After years of competing ferociously on price and quality, many companies have come to believe that superior design will be the key to winning customers in the Nineties. by Brian Dumaine

CORPORATE PERFORMANCE 96 COMPANIES TO WATCH Clayton Homes is on a roll as the biggest retailer of mobile homes. by Ret Autry

Also: Digi International, Thermo Instrument Systems, and C.R. Gibson.

LAURELS 98 THE NATIONAL BUSINESS HALL OF FAME They are more than wealthy or powerful or prominent; this year's laureates, from Visa's Dee Hock to Motorola's Robert Galvin, have changed the world around them for the better. by Peter Nulty

DEPARTMENTS 4 EDITOR'S DESK 8 INDEX 12 NEWS/TRENDS How George Bush is managing as Commander-in-Chief, more churning at the top among CEOs, U.S. philanthropy in Japan, Customs as tax informer, Drexel today, America ties on yellow ribbon, what it costs to fly worry-free, and more.

21 PERSONAL INVESTING How to find stocks that can outrun a bull market: Bet on companies whose earnings have surprised even the analysts. by Susan E. Kuhn

Also: Brokers get friendlier (for a price), who'll get the contracts to rebuild Kuwait, and Portfolio Talk with Bjorn K. Borgen of Founders Funds.

105 FORTUNE PEOPLE Dr. Doom turns sanguine, Mr. Ann Taylor sticks to his knitting, Lisa the Liquidator of the Resolution Trust Corp., a network's dances with wolves, and more. by Mark M. Colodny

106 ON THE RISE

117 BOOKS & IDEAS Advice in the recent crop of management guides is often obvious and sometimes downright dumb. Still, a handful at least offer the reader something to chew on. by Andrew Erdman

121 LETTERS

123 KEEPING UP A script for Donald Trump, the case of the vanishing database, economics for pilots, and other matters. by Daniel Seligman

ABOVE: Avon rep Kathy Thebo finds new customers in National Guardsmen Floyd Lewis and Mike Kline in Phoenix. Photograph by Jim Mendenhall.

COVER: Airbrush painting by Nicholas Gaetano.