(FORTUNE Magazine) – STEEL, CHEMICALS, railroads, and other cyclical industries will get hurt. But because of cost cutting prudently done while business was good, many companies will come out of this recession looking better than they did last time, in 1982. Companies that churn out food, drugs, and other products we can't do without will thrive. Here's the outlook for 21 U.S. industries.

-- CARS: In the pits. The Big Three automakers may all lose money on U.S. operations in 1991. FORTUNE expects new car and light truck sales of 13.5 million, down from an already low 13.8 million in 1990. According to Paine Webber analyst Ann Knight, General Motors is ''hemorrhaging in North America'' and will see total earnings fall 23% from 1990, to $696 million, excluding a $2.1 billion after-tax restructuring charge taken this fall. Ford Motor's earnings will plunge 55%, to $554 million. Adds Knight: ''Relative to the competition, Ford's product has gotten long in the tooth, and its pricing and market share will be under pressure.'' She projects Chrysler will more than double its losses to $12 million in 1991. Just as the Big Three were announcing a round of shutdowns in November, Toyota Motor made public a plan to nearly double capacity at its Kentucky plant. Says analyst Chris Cedergren of J.D. Power & Associates: ''The Japanese continue to be relentless in their pursuit of the U.S. market, even when demand is slipping.'' He projects that the Japanese slice will increase to 30.2% -- up by two percentage points from 1990. Lack of consumer confidence has caused even cash rebates to lose effectiveness. Notes analyst Edward Sullivan of WEFA Group, an economic consulting firm: ''There are great buys, but if you think you're headed for the unemployment line, you don't stop off at the car dealer first.''

-- CLOTHING: End of a trend. The shopper of the Nineties will opt for sensible threads. Predicts Kurt Barnard, president of Retail Marketing Report: ''Consumers will insist on lastingly fashionable, high-quality clothes. They will be less trendy, more thoughtful, and more tradition-bound.'' In a sense, fashion will go out of fashion. Partly because of the new sobriety, FORTUNE expects unit sales at the retail level, which were flat in 1990, to increase only marginally in 1991. Makers of women's wear had better gird for a decade of slow growth. In the Eighties, women entering the work force bought suits and other career apparel by the closetful. Now, warns Carol Farmer, a consultant: ''Women don't need to build a wardrobe for work anymore. It's foolish to think that level of buying will continue.'' The suppliers and retailers that will prosper, says Barnard, are those that finely tailor their lines to appeal to specific customer types: the Gap, the Limited, Donna Karan, Liz Claiborne, and a few others.

-- DRUGS: Vigorous. Even when the economy gets sick, the pharmaceutical business thrives. Paine Webber analyst Ronald Nordmann expects profits to rise 17% a year through 1992, and revenues to grow at a 10% rate. Drug companies have been shedding recession-sensitive product lines such as cosmetics. Independent analyst Hemant Shah predicts cost-cutting moves will account for most of the industry's earnings growth in the next five years. Owing partly to economies from mergers, profits at Bristol-Myers Squibb and SmithKline Beecham should spurt as much as 20% in 1991, says analyst Craig Baskin of Duff & Phelps. New products will also contribute. By June, Warner-Lambert is expected to introduce Cognex, a drug to treat Alzheimer's disease, which afflicts more than four million Americans. Says Nordmann: ''Cognex is entering a therapeutic vacuum. It could sell in the hundreds of millions of dollars or better.'' Another drug likely to win FDA approval: Merck's Proscar, for the ten million men who suffer from enlarged prostates.

-- FOOD PROCESSING: What recession? Food company profits should sizzle. ''You have to eat,'' says William Leach, an analyst at Donaldson Lufkin & Jenrette, noting that the stocks of food companies generally perform better than the S&P 400 when the economy slumps. A factor that will boost profits this time: Raw materials are getting cheaper. Grain prices declined 10% in 1990; the cost of meat should fall in 1991. Leach expects earnings, up 10% in 1990, to climb 16% in 1991 and 12% in 1992. Innovative companies will find Americans eager to wolf down new products. In ! 1989, nutrition-conscious adults started zapping ConAgra's microwaveable Healthy Choice dinners by the millions. Last April, ConAgra and Tyson Foods opened up the kid niche by introducing Kid Cuisine and Looney Tunes Dinners. Now ConAgra plans to take advantage of both trends with Snoopy's Choice, nutritionally correct dinners for children to pop into the microwave.

-- HOUSING: Coming in from the cold. The worst of the storm has passed. FORTUNE expects increases in single family housing starts every quarter between now and mid-1992. But because growth is starting from such a depressed base, total housing starts in 1991 won't catch up with those of 1990. Why are houses back in vogue? For one thing, people can afford them more readily. Prices in 1991 will slip slightly, to a median of $95,000, as family income noses upward. Prospective owners are far better off now than in the last recession, when astronomical interest rates put purchases out of just about everyone's reach. FORTUNE estimates that mortgage rates, now around 9.6%, will sidle south to 9.5% before firming in the year's second half. Banks will hesitate to lend to developers, who are on average riskier bets than home buyers, says Barbara Allen, an analyst at Kidder Peabody. She thinks tight credit will prevent an early Nineties construction spree. Only builders with sound balance sheets -- such as Centex and Ryland Group -- will get the loans they need to keep hammering away.

-- OIL: Hostage to events. Profits gushed when Iraq invaded Kuwait and the price of oil leaped toward $40 a barrel. What happens next depends almost entirely on how the Gulf confrontation is resolved. If the price of oil stays above $25 a barrel -- a virtual certainty if war breaks out -- industry profits will rise 50% in 1991, says Arthur L. Smith, chairman of John S. Herold, a research and consulting firm. But not all oil companies will benefit equally. Those with large exploration and production divisions, such as Texaco, will gain more than those that mainly refine and market, such as Ashland Oil. If oil prices fall to $22 to $25 a barrel -- where many experts think they would end up after a peaceful resolution -- profits could increase as much as 20%, says Smith. Philip Verleger, a visiting fellow at the Institute of International Economics, says a price drop could mean a windfall for refiners and marketers, who could cash in on a temporary lag in prices at the gas pump.

-- PAPER: Frayed. If papermakers had the choice, they would probably chuck 1991 into the wastebasket. Says Salomon Brothers analyst Sherman Chao: ''It will be as bad a year as anyone can remember. Everything that can go wrong will.'' Analyst Lawrence Ross of Paine Webber thinks 1991 revenues could be flat or decline by up to 2%, while profits could crumple as much as 25%. The industry will have nearly 4% in new capacity coming onstream in 1991, just as demand sags. Consequently, Chao expects capacity utilization -- a key to profitability -- to drop four percentage points, to 89%. Meanwhile, papermakers are investing heavily in equipment for recycling: good for heading off pressure from environmentalist groups but not so good for profits, says Chao. The sole bright spot: exports. According to Prudential-Bache analyst Mark Rogers, even before the dollar began its recent slide, the U.S. was the lowest-cost major producer of paper.

-- CHEMICALS: A boom and a glut. This is a tale of two industries. Commodity chemical producers will have the worst of times in 1991. Revenues will slump by as much as 10%, while earnings could fall 30%, according to analyst John L. Garcia of Wertheim Schroder. But makers of specialty chemicals will prosper. Merrill Lynch analyst Karen Lane Gilsenan predicts sales will be up as much as 8%, and profits 9%. Unlike specialty companies, which mostly serve niche markets and can pass along cost increases to customers, commodity makers are caught between slowing demand and higher costs. Says Garcia: ''Prices are going down, and margins are going down even faster than prices.'' Ethylene, he figures, will fall from 25 cents a pound in 1990 to 22 cents in 1991, while operating margins per pound will drop from 12 cents to 4.

-- METALS: Dented. Recession will hammer U.S. steelmakers. Profits, $1.5 billion in 1990, will vanish in 1991 as sales fall from $38 billion to $35 billion, says John Jacobson of AUS Consultants, a steel and energy consulting firm. Capacity utilization will drop to 78%, down ten percentage points from its 1988 peak. But steelmakers, which have spent years paring payrolls and boosting productivity, will keep reclaiming market share from foreign rivals. Imports peaked in 1984 with 26% of total U.S. consumption; in 1991 they will account for only 15%. Though the demand for copper will remain constant, producer prices should drop, from an average $1.22 per pound in 1990 to about $1 in 1991 and 90 cents ! in 1992, says analyst J. Clarence Morrison of Prudential-Bache. A reason: Chile's big new Escondida mine. As for aluminum, Smith Barney consultant William Siedenburg expects a 2% increase in world capacity to coincide with a 2% drop in demand. That should drive down the price of ingot, from 76 cents a pound in 1990 to as low as 67 cents in 1991. Gold has lost some magic as a hedge in uncertain times. The price surge that experts predicted when Iraq invaded Kuwait never materialized. Morrison projects a weighted average price of $385 per ounce in 1991.

-- COMPUTERS: Not as smart. In an industry weaned on double-digit expansion, sales in 1990 rose a relatively meager 8.3% to $176 billion. Gartner Group analyst Randall Brophy expects growth in 1991 to be punier still, at 7%. Says Montgomery Securities analyst John Jones: ''Data-processing customers are strapped for cash, and any purchase that can be deferred probably will be deferred.'' Small wonder that the action is in software, stuff that enables users to put existing investments in computer hardware to work. In the first three quarters of 1990 domestic sales grew 27%. Exports of software for personal computers exploded, enabling industry leader Microsoft to grow 47%. Engineering workstations were the industry's hottest boxes. Sun Microsystems, the dominant manufacturer, saw 1990 earnings rise 83%; total workstation sales will grow 40% in 1991, to $12 billion, according to Dataquest, a market research firm. Meanwhile, the growth of the PC market will fall below 20%. Don't banish mainframes to the dinosaur exhibit just yet. IBM and Amdahl have rolled out a new generation that will help spur that segment to 10% growth. Big Blue may be a surprise winner in the recession, says Salomon Brothers analyst Sanjiv Hingorani: ''IBM has strong products in all its major markets for the first time in years. And on the expense side, the effects of the company's restructuring are finally flowing to the bottom line.'' He expects profits to increase 5% in 1991.

-- INDUSTRIAL EQUIPMENT: Crunch time. Heavy-equipment makers face six tough months before demand picks up in the second half of 1991. According to Prudential-Bache analyst Steven Colbert, sales will fall 5% in 1991, while earnings could sag as much as 15%. That decline is broadly reflected across the industry's major product categories. Unit sales of construction equipment, already depressed in the crumbling commercial and residential real estate markets, will fall even more, by as much as 10%. Heavy-truck unit sales will decline by 7.5%. The news is no better down on the farm. According to Kidder Peabody analyst Richard Sweetnam, tractor purchases have slowed because farmers think Congress may cut subsidies, and because global bumper crops of wheat and other grains have driven down commodity prices.

-- DEFENSE: No reprieve. The buildup in the Middle East won't protect America's armsmakers from the perils of peace. ''Even if the U.S. spent $50 billion fighting Saddam Hussein, the industry would still shrink -- unless the war grew into another Vietnam,'' says aerospace analyst Paul Nisbet of Prudential-Bache. The Aerospace Industries Association projects sales of military aircraft and missiles will decline 18% in real terms in 1991, to $42.3 billion. The industry, which pumped up capacity in the macho Reagan years, has yet to adjust to a defense budget that has fallen 14% in real terms since fiscal 1985, and is set to fall 9% in 1991. Expect to see more layoffs and fewer companies in the next five years. Weapons makers that find civilian applications for their technology -- surveillance equipment, for example -- may be able to convert. But, says Virginia Lopez, head of research for the AIA: ''There is probably not enough business out there to make up for the decline in defense spending.'' The spending that remains will likely be earmarked to meet a new threat: technologically sophisticated Third World countries like Iraq. ''We don't need the same technology to fight these guys as we did the Soviets,'' contends Mark Bobbi of Forecast International, a consulting firm. He thinks Congress will cut spending on exotic weapons, such as the Advanced Tactical Fighter and the B-2 bomber, and concentrate instead on making existing armaments lighter, more mobile, and ready for deployment anytime, anywhere.

-- COMMERCIAL AIRCRAFT: In friendly skies. That mighty U.S. export machine, Boeing, continues to surge. C.J. Lawrence analyst Howard Rubel expects its profits to climb at least 20% in 1991, to more than $1.7 billion, on $29 billion in sales. Wolfgang Demisch, director of research at UBS Securities, believes McDonnell Douglas will finally fly its commercial business into the black in 1991. Its problem, he says, is that it has yet to respond to Boeing's new generation of twin-engine planes, the 777, ''and that would cost serious money.'' Boeing's backlog, now $103 billion, could keep its factories full for years even if orders stopped. They won't -- but they could slow as airlines, buffeted by recession, delay expansion. Says Rubel: ''When profits are good, airlines spend like a sailor on leave. When they're bad, they're as parsimonious as a frugal housewife.''

-- TELECOMMUNICATIONS: Dial cellular for growth. Some analysts say recessions boost long-distance traffic: As businesses become more niggardly about travel, the theory goes, executives do more work over the phone. Frank Governali of First Boston predicts that long-distance sales will climb at least 6% in 1991, to about $55 billion, and earnings will grow 9%. Sales of cellular service, $2.5 billion in 1990, will rise at an annual rate of 30% over the next 18 months, forecasts Eastern Management Group. But the latest wave of cellular subscribers use the phones much less than early adopters did, causing the average monthly cellular phone bill, $100 a year ago, to slip to $80. The Baby Bells will keep plugging away. Lately regulators have forced some to cut rates on so-called Plain Old Telephone Service; partly as a result, POTS revenues will grow no more than 2% in 1991, says Gartner Group analyst Liza Draper. In quest of unregulated opportunity, some companies have gone global: Bell Atlantic does business in New Zealand, Southwestern Bell in Mexico, US West in Europe. Says Link Resources analyst Mark Winther: ''There is not much available in the U.S. that would dramatically improve their bottom line. They almost have to go overseas.''

-- RAILROADS: No wrecks. Expect railroads to roll through this recession without getting derailed, though revenues could slump as much as 3% in 1991, says Graeme Anne Lidgerwood, an analyst with First Boston. Of the major railroads, Burlington Northern is likely to do best because the downturn probably won't slow shipments of coal and grain, its main cargoes, says analyst Joel Price of Donaldson Lufkin & Jenrette. Conrail, on the other hand, will suffer some: It depends heavily on shipments of autos and other cyclical goods. In 1991, Congress will consider raising weight limits on interstate highways from the present 80,000 pounds to 135,000 pounds, which would help truckers at railroads' expense. The Association of American Railroads claims that if truckers win approval for oversize twin rigs, railroad operating profits will collapse.

-- UTILITIES: Low on juice. The mild summer and autumn of 1990 caused electric utility revenues to wilt and profits to brown out. If the climate reverts to normal in 1991, sales will be up 2% or more and earnings 4.5%, predicts Edward J. Tirello, an analyst at Smith Barney. Demand in the early Nineties will grow at just over 2% a year, analysts say -- a slow pace by historical standards, but enough to overwhelm existing power plants. According to Goldman Sachs analyst Ernest Liu, more than half the new capacity will be supplied by non-utility generators (NUGs) such as Enron Power and Mission Energy. These unregulated businesses make electricity and sell it, often at great profit, to utilities for distribution. To get in on the opportunity, utilities such as Pacific Gas and Electric own NUGs outside their service areas. Electric companies will struggle to eliminate transmission bottlenecks, the chief cause of brownouts in periods of peak demand. Liu thinks public anxiety about the hazards of electromagnetic fields could force utilities to bury new high-voltage lines, which would raise costs. Recent amendments to the Clean Air Act will sap profits of utilities in the Midwest that burn high-sulfur coal, the source of acid rain. The law includes an unusual provision that allows market forces to distribute the cost of compliance, estimated at $18 billion in this decade. Utilities that beat the standards can sell their emission allowances to those that prefer not to revamp polluting plants.

-- ENTERTAINMENT: Mixed reviews. Some of the fun will go out of the television and movie businesses in the next 18 months. Kidder Peabody analyst Christopher Dixon expects the three major networks' advertising sales to sag and revenues to stay flat in 1991. Hollywood's sales will grow by as much as 12% -- but expenses will rise even faster, limiting profits to single-digit growth. In recent years international box office receipts have shown annual increases of more than 20%, according to Dixon. The biggest growth in the U.S. has been in non-box-office sales, especially home video. It will account for fully 50% of movie industry revenues in 1991, up from 10% in 1983. There are now so many different ways to sell a movie that the average cost of marketing a major release has more than doubled in the past two years, to $20 million. Cable TV and home video should benefit from the recession, as budget- conscious consumers turn to stay-at-home diversions. But for both & businesses maturity is setting in. Cable revenues and profits, which grew more than 15% in 1990, will slow to as low as 9% in 1991, by Dixon's estimates. Analyst Peter Appert of C.J. Lawrence projects similar results for the home video business. The music industry will hit high notes in 1991 and 1992, having attracted hordes of new listeners in Europe and Asia. Dixon expects revenue and profit increases of as much as 20% each year, mostly in booming sales of compact discs.

-- MEDICAL SERVICES: Infirm. For the U.S. health care system, the prognosis is grim: It is burdened with costs that outpace inflation and a population that is aging and includes 37 million uninsured people. Says Alexander Williams III, senior vice president of the American Hospital Association: ''We have a system that nobody's happy with: not the government, not business, not the hospitals.'' Hospitals -- which account for 40% of the industry -- derive half their revenues from programs such as Medicare. In 1990 it reimbursed them only 94 cents for each dollar of costs, a number that won't rise in 1991. Meanwhile, corporations and insurers are resisting the hospitals' use of cost- shifting -- charging private patients to make up for money lost on Medicare. As a result, predicts Richard L. Clarke, head of Healthcare Financial Management Association, in the next two years hospitals' earnings will remain stagnant at best. Not everyone loses money on the huge and growing portion of GNP Americans pay for health care -- 12% in 1990 compared with 9.1% in 1980. Salomon Brothers analyst Margo Vignola expects earnings at Humana, the largest publicly held hospital company, to go up a robust 16% in 1991. The company operates a lucrative group insurance business that refers cases to its hospitals. Also likely to prosper, according to Donaldson Lufkin & Jenrette analyst John Hindelong: specialized surgery centers and companies that deliver intravenous feedings and medication to invalids at home. Such businesses appeal to employers and insurers because they provide care more cheaply than hospitals; Hindelong says they'll grow at a 30% annual rate.

-- AIRLINES: Mayday! Saddam Hussein's invasion made fuel prices rocket and put airlines in a spin. According to Dillon Read analyst Ray Neidl, losses could hit a record $1.5 billion in 1990. And if fuel stays high, says Neidl, 1991 doesn't look much better. A quick resolution in the Gulf would allow strong airlines to fly in the black by the third quarter of the year, when summer travelers traditionally crowd the skyways. But by then the industry landscape could be littered with wreckage. Notes Lee Howard, head of Airline Economics, a consulting firm: ''We've long said all it would take to wind up the consolidation is another fuel crisis or a recession. Now it appears we have both.'' Possible casualties: Pan Am and TWA, which are operating at a negative net worth, and Eastern and Continental, which are in Chapter 11. Looking for good news? Demand in Europe and Asia will continue to outpace domestic growth. Edmund Greenslet, publisher of The Airline Monitor, predicts that European governments will soon ease regulations and allow U.S. airlines to establish hubs in London, Frankfurt, and Paris.

-- BANKS: Down, with some out. Marred by losses and layoffs, 1990 would have been a good year for a bank holiday. The same might go for 1991. One banking company newly chastened is the largest, Citicorp, which proposes to cut its dividend, lay off thousands, and make special additions to reserves (see Money & Markets). Dozens of smaller banks will simply fold. FDIC Chairman L. William Seidman recently told Congress that he expected 180 failures in 1991 to throw the FDIC for a $5 billion loss. To keep the fund solvent, he plans to slap surviving banks with an assessment and raise annual premiums. Some analysts think the worst has already come. ''We're in a bottoming mode,'' says James McDermott, president of Keefe Bruyette & Woods, which tracks 150 U.S. banks. Assuming a ''very messy fourth quarter'' of 1990 and an economic recovery beginning in the second half of 1991, McDermott thinks bank earnings could rebound by as much as 11% for the year. A few banks, such as SunTrust of Atlanta, First Wachovia of Winston-Salem, North Carolina, and NBD Bancorp of Detroit, seem guaranteed to prosper, having shied away from perilous real estate and LBO loans while becoming increasingly powerful in their regions.

-- FINANCIAL SERVICES: Trading up? After a year of massacres on Wall Street, 1991 looks almost cheery, from the standpoint of Sanford C. Bernstein analyst Michael Goldstein. He expects pretax profits for the securities industry, off 20% in 1990 to about $2 billion, to recover slightly or at least hold steady in 1991. Says he: ''The odds of everything getting a lot worse are not as high as the odds of things getting a little better.'' Alison Deans, an analyst at Smith Barney, also expects moderate improvements -- but primarily as a result of still more firings. Hardly anyone foresees a big resurgence of merger activity, despite AT&T's recent bid to take over NCR. But if the stock market rises, Goldstein predicts, the securities industry might do surprisingly well the old-fashioned way -- by underwriting common stocks. He thinks highly leveraged companies will be eager to strengthen their balance sheets by issuing shares. Insurers are the ones feeling the big chill now. According to Herbert E. Goodfriend, an independent analyst, earnings for 1991 in the property and casualty business will be ''flat at best -- barring a major catastrophe.'' He expects 1992 results to be awful, even without natural disasters, as the industry hits a cyclical low: Profits will plunge as much as 15%. Life insurers are about to be stung by changes in federal tax law that will reduce deductions and cost the industry $8 billion this year. That, along with continuing write-offs on sour investments in commercial real estate, will dampen 1991 results. According to analyst Joyce Culbert of Firemark, a consulting firm, profits of publicly traded life insurers will grow 7.4% in 1991, about a percentage point less than in 1990.