INDUSTRY-BY-INDUSTRY OUTLOOK : The Year in Preview

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:

TRANSPORTATION: Barring an economic slump, passenger traffic will remain strong for the major airlines. But any further rise in fuel prices will test the carriers’ ability to maintain profit margins, and the challenge will be even tougher for start-up airlines. Railroads and trucking firms also will be under pressure from higher fuel costs and rivals’ price-cutting.