What was going on when I was born?

U.S. industrial output fell 0.8 percent in March, providing further evidence that the recession was still in progress and affecting all areas except military and aerospace goods and autos, the Federal Reserve reported. Saying the economy was ''dead in the water,'' Treasury Secretary Donald T. Regan urged a compromise in budget talks, noting that would provide a signal to the market that would send rates down and spur a revival. (Page A1.) The U.S. will seek common ground rules for East-West trade at the June 4 economic summit meeting in an effort to avoid further conflict with Europeans over a Soviet natural gas pipeline, Administration officials said. They said the U.S. would drop efforts to block exports of construction equipment to build the pipeline. (D1.)

International Egypt has pledged to withdraw ''within a few days'' the troops it stationed in Sinai that Israel says exceeded the limits permitted by the peace treaty, according to Defense Minister Ariel Sharon. In addition, he said, a senior Egyptian Army officer is to arrive in Israel today to discuss ways to halt the infiltration of arms by the Palestine Liberation Organization through Sinai into the Gaza Strip. (Page A1, Column 6.) Egypt carried out the executions of five Moslem fundamentalists convicted in the assassination of President Anwar el-Sadat only hours after a clemency plea was rejected by his successor, Hosni Mubarak. (A1:5.)

The RCA Corporation yesterday reported a 44 percent rise in firstquarter earnings, to $60.5 million, after an extraordinary gain of $29.1 million from the sale of several units. Without that gain, the company would have had a 25.2 percent earnings decline. Mark Hassenberg, vice president and analyst at Donaldson, Lufkin & Jenrette Securities Corporation, said: ''Over all, considering the environment and everything, it was a quarter that came out as expected; there were some areas of substantial strength.''

Like many of the new generation of chief executives, Richard M. Bressler starred first as a financial specialist and then took the reins as a division head and a corporate planner before reaching the top. That training, in three companies, is now being put to the test. Nearly two years ago, Mr. Bressler moved from a high-level oil industry job to head Burlington Northern Inc., a 29-state railroad that for years had been plagued by an awkward management structure that resulted in lagging profits and a failure to take advantage of the company's natural resources. By introducing new financial goals, filling some key positions with outsiders and focusing more on natural resources, Mr. Bressler has eased some problems and moved Burlington onto a markedly different track. Following a billion-dollar spending program undertaken by his predecessors to cash in on the Western coal-hauling boom, the 51-year-old chairman and chief executive officer dropped 660 miles of idle rural track, along with outmoded depots and maintenance yards.

The stench hit the Staten Island neighborhood in January. Rita Jones and Linda Fishkin remember reeling with nausea. Sharon Edwards says that she could not breathe and that she quickly pulled her children into the house. The noxious smell was coming from an excavation for a sewer line at New York City's nearby Brookfield Landfill, an open garbage dump. Meeting at the school bus stop and talking among themselves, the mothers discovered that since the odor began in January, many of their families had been complaining of the same ailments: skin rashes, headaches, urinary difficulties, breathing problems and stomach pains.

''We're in a very steep recession at this point, and the economy is dead in the water.'' - Treasury Secretary Donald T. Regan. (A1:1.)

President Reagan urged President Leopoldo Galtieri of Argentina today to show flexibility and restraint in the Falkland Islands crisis and help spare the Western Hemisphere a conflict that ''would be a tragedy and would leave a bitter legacy.'' The two leaders spoke for about 20 minutes in a telephone call initiated by the Argentine leader, who ''reaffirmed to President Reagan his personal desire for a peaceful resolution of the dispute,'' according to a press statement released by the White House. Secretary of State Alexander M. Haig Jr., arriving in Buenos Aires on his latest mediation mission, called for flexibility from both Argentina and Britain in resolving the crisis, which began with the seizure of the British-administered Falkland Islands by Argentine troops on April 2. (Page A10.)

PEOPLE who think that the great age of old-master collecting is over should go along to the Metropolitan Museum and see the Dutch 17th-century paintings from the collection of Mr. and Mrs. Edward William Carter, which is on view through June 20. The Carter collection is no more than 15 or so years old, but it is thoughtful, strange and touching beyond all expectation. Nor is it confined to painters who have been in favor with collectors for three centuries. As recently as 50 years ago, for instance, the name of Adriaen Coorte was virtually unknown. Nineteenth-century commentators, no matter how discerning, had nothing to say about him. Yet the Carters' ''Wild Strawberries in a Wan Li Bowl'' reveals Adriaen Coorte as a master of the small-scale still life -one with a great flair for the equivalent in still life of the internal rhyme in poetry.

The Festival of the Enchanted Island isn't a celebration of Manhattan. It's a three-day event named after an extravaganza given by Louis XIV in 1664, and it opens tonight at 8 in Symphony Space, Broadway and 95th Street, with music, dance and theater from the court of France's Sun King. The festival is a collaboration of the New York Consort of Viols, Music for a While, Sachiyo Ito and Company, and Courante, a new dance company. Tomorrow night at 8, the program will contrast court dance, music and ritual of 18th-century France and Okinawa. On Sunday at 3 P.M., 14th-century fare: music and verse of Guillaume de Machaut. Tickets for each performance: $7.50 and $10. Reservations: 864-5400. Tonight's program will be repeated Sunday at 7 P.M. as a benefit for the performing groups, followed by supper at the French Embassy. Tickets: $50; information: 724-3105. NEW MUSICALS IN SOHO Soho Rep, a theater company at 19 Mercer Street that concentrates on plays, is offering a new musical series this month and next, starting tonight at 8 with ''The Girl Who Ate Chicken Bones.'' It's described as a fairy tale of politics and power, and includes a pair of witches, a female Robin Hood, a captive princess and an insurance agent. The book is by Stan Kaplan, music by David Hollister, lyrics by both men. The director is Marlene Swartz, co-artistic director of Soho Rep. Tickets are $6. Reservations: 925-2588.

The Aetna Life and Casualty Company, the nation's largest publicly held insurance company, announced yesterday that it had agreed to acquire Geosource Inc., a Houston oil service company, in a stock transaction valued at $638 million. The boards of both companies are scheduled to meet today to act on the agreement, which would make Geosource a subsidiary of Aetna. Under terms of the agreement, Aetna would issue about 13.5 million new shares and exchange 1.25 of Aetna shares for each Geosource share.

Defense Minister Ariel Sharon said today that Egypt had pledged to withdraw ''within a few days'' the military forces in Sinai that Israel said exceeded the limits permitted by the peace treaty. Egypt had denied that it had more troops in the area than the pact permitted. In addition, Mr. Sharon said, a senior Egyptian Army officer will arrive in Israel on Friday to discuss methods of halting the infiltration of arms by the Palestine Liberation Organization through Sinai into the Gaza Strip. Agreement on these two matters was considered central to assuring Israeli willingness to proceed on time with the return of the final third of Sinai on April 25, since apprehensions about Egyptian intentions have risen in recent weeks.

The nation's industrial output fell eighttenths of 1 percent in March, further confirming that the recession is not over yet, the Federal Reserve Board reported today. Before the March figures were released, Treasury Secretary Donald T. Regan said that the economy was ''dead in the water.'' Emphasizing the importance of the current budget negotiations with Congress, Mr. Regan said a compromise was needed to cut the Federal deficit and bring interest rates down so the economy can revive. ''High interest rates have brought this economy to its knees,'' he said. The March decline in industrial production, which measures the output of the nation's factories, mines and electric utilities, follows a 1.2 percent increase in February and a 2 percent decline in January. Economists have said that the rise in February was just a rebound from the sharp decline in the first month of the year induced by bad weather and not a sign of an economic rebound.