What was going on when I was born?

The economic policies emerging in Italy make it clear that some of the country's favored industrial traditions and fiscal prejudices may be falling victim to the economic slump. The Government is now trying to increase cooperation between Fiat, the private company that is Italy's biggest auto maker, and several state-owned companies in the auto, steel and telecommunications sectors. Montedison, the state-controlled chemicals group, is cooperating with private chemical companies, such as the Occidental Petroleum Corporation. In seeking this cooperation, Government leaders have conceded that managers of state-owned companies are not able to cope with mounting industrial problems and need help from the private sector.

Flush with some inherited money, Ruth Spencer put some of it into American Telephone and Telegraph stock soon after she got out of college. Now retired and a widow living in Terrell, Tex., she still has the stock, but with A.T.& T. splitting up the Bell System, she isn't sure what to do with it. ''Up to now, Telephone has been plenty good to this shareholder,'' she said. ''I've read every little smithereen I can find, and I've clipped them and marked them and puzzled over them. Certainly, anything that's new is fearful, though I'm glad that that dad-gum suit is settled. I'll tell you what I'm going to do. I'm going to keep my stock, but I'm going to watch it like a hawk. Don't think I'm not.'' Every member of the phone company's far-flung family of three million shareholders - from the big pension plans to the short-order cook in Duluth to the widow at poolside in Miami -has been watching A.T.& T. stock with an accountant's keen eye ever since the tumultuous announcement some four weeks ago that the phone system would be broken up.

IN the late 1960's and early 70's it was easy to conjure up the image of a modern interior: streamlined, open space, shiny su rfaces and glossy walls - a living area geared to hi gh technology and often dubbed ''space age.'' One might find the odd piece of art, a single flower or the right ashtray adorning the uncluttered surfaces. But the design goal was to attain a bare, clean look synonymous with industrial sophistication. It supposed willingness on the part of its devotees to eliminate most of their possessions and to have a taste for the domestic adaptation of such materials as stainless steel and travertine - materials usually used in offices and skyscraper lobbies. Often it also meant spending a lot of money.

Retail sales dropped 1.1 percent in January, the Commerce Department reported today. The decline, the fourth in the last seven months, had been expected in light of heavy snow, which discouraged shopping in parts of the nation; the recession; a sales decline at auto showrooms, and continued high unemployment, which left many Americans with little money to buy more than essentials. Overall retail sales, which make up more than 60 percent of the nation's gross national product, fell to a seasonally adjusted $86.1 billion in January after declining a revised two-tenths of 1 percent in December, the department reported. Previously, it said retail sales increased four-tenths of 1 percent in December.

Harcourt Brace Jovanovich, one of the country's largest publishing concerns, will move its headquarters and most of its operations out of New York City to Florida and California. In a statement yesterday to the company's 8,300 employees, 2,000 of whom work in the city, William Jovanovich, the company chairman, said the decision to move was made only after a 20-month study of alternatives. He said it was based on the costs of office space, energy and taxes, and on a lack of adequate transportation. ''The cost of space was not decisive in itself,'' Mr. Jovanovich said. ''As a national and international company, H.B.J. requires varied working hours. Such scheduling is not generally afforded in New York City. In my own view, the greatest social need of adults in New York City is a variable, reliable and safe transportation system.''

''I'm not going to lie. Many of us can't be effective at this time.

''IJUST found out that my new smoke detector is the radioactive kind,'' the inquiries usually begin. ''Is it really safe?'' As a new law went into effect on Jan. 1 requiring that nearly two million smoke detectors be installed in the five boroughs, tenant organizations expressed concern that ionization smoke detectors, which contain a small amount of radioactive material, could pose a health risk. In recent weeks, according to Mayor Koch's office, residents in hundreds of apartment houses asked their landlords not to install ionization detectors, and politicians, including the Manhattan Borough President, Andrew Stein, called on the city to halt their use. ''I have had more phone calls on this than any other subject since I've been in council,'' said Councilwoman Carol Greitzer of Manhattan, who has co-sponsored a bill that would prohibit the installation of ionization detectors in the future. ''People didn't want them. They believe the detectors are dangerous.''

The Federal Reserve Board will continue to pursue a tight monetary policy this year, Paul A. Volcker, the Fed's chairman, said in presenting his annual monetary targets to Con gress. Mr. Volcker said spending cuts and tax increases to reduce pro jected Federal budget deficits were crucial to recovery. However, h e did not directly criticize President Reagan's projected budget deficits. (Page A1.) Mr. Reagan, in his first Economic Report to Congress, said he was trying to break with past practice and create a strong, noninflationary economy in which the private sector played the dominant role. (A1.) The Administration based its optimistic forecast on the belief it had dealt with the major economic problem of the last decade, the mixture of economic stagnation and high inflation. (D1 9.)

A revolt against the Government of President Hafez al-Assad has been under way for eight days in the central city of Hama, Western diplomatic sources reported today. About 8,000 Government soldiers were said to have the city under siege. About 100 Government tanks and artillery pieces have leveled part of the city, according to Japanese businessmen evacuated by Government troops Tuesday night. The businessmen said the bombardment was continuing.

Moving further into the oil and gas business, the Allied Corporation and the Continental Group announced yesterday that they had agreed to buy the Supron Energy Corporation of Dallas on a 50-50 ba sis for $35 a share, or $714 million in cas h. In response to a question about the price, an Allied spokesman, Christina Pagano, said that the announced price represented only the 20.4 million shares in public hands. Donald J. Donahue, vice chairman of Continental, said in a telephone interview that executive stock options would also be purchased, lifting the price to over $775 million. Will Assume Debts He said that the two companies would also assume Supron debts of $50 million to $55 million, thus making the overall price some $825 million. The Allied spokesman later said that the $825 million figure was ''O.K .'' More than h alf of the funds to pay for the company would come directly from Supron's own oil and gas production, Mr. Donahue said. In a statem ent announcing the terms, Edward L. Hennessy Jr., chairman of A llied, and S. Bruce Smart Jr., chairman of Continental, said that an Allied subsidiary would first buy Supron and then transfer Supr on's oil and gas properties to an Allied-Continental partnership.

A scuffle broke out at a church in Queens yesterday when the church ran out of surplus cheese that it was distributing to the needy. Almost 200 people were left waiting in line in the cold on New York City's first day of participation in the Federal Government's nationwide program. Except for that incident, the program in the city, where most of the state's needy live, ran smoothly. No one was hurt or arrested in the incident outside People's United Methodist Church at 39-36 21st Street in Long Island City. Wade L. Garrett, the director of the cheese program at the church, said he was sorry he had not ordered more than the 3,900 pounds he had received.

A front-page picture caption yester- day misidentified the diplomat sitting at the Madrid conference on European security with Leonid F. Ilyichev of the Soviet Union. He was Yuri V. Dubinin, Soviet Ambassador to Spain.