California came several years late to the nation’s economic recovery party, but the state should be celebrating all through 1997.

Here is what key industries will be up to:

SMALL BUSINESS: The self-employed and small firms will benefit from federal legislation that in 1997 will bring increased business deductions, health insurance deductions, medical savings accounts for employees and simplified pension plans. Financial service companies are already rolling out these small business products and businesses will be aggressively courted. Expect to see small companies starting to use the Internet to raise venture capital, exporting more and pushing for fewer state approvals for small companies issuing stock. Don’t expect small firms to absorb many of the people being shed from the welfare rolls.