What was going on when I was born?

The man identified by associates here as Josef Mengele, the long-sought fugitive Nazi war criminal, led a reclusive life for nearly two decades in and around Brazil's largest city, according to neighbors, friends and a housemaid who says she loved him. They portray the man as an authoritarian figure, but also as someone who was cultivated and sometimes charming. They say he spent his days at secluded farms and simple cottages, tended sick animals, disparaged black people, kept a diary but never publicly discussed history or politics, and liked to watch ''Disneyland'' on television. The accounts, given in news interviews and in depositions to the Brazilian police, help explain how the man -if indeed he was the Auschwitz death-camp doctor - managed to escape his pursuers for so long only to drown, as his former protectors here say, in a swimming accident in 1979. Many Questions Unanswered In fact, the story that is now emerging of a robust but lonely exile bears almost no resemblance to the often lurid accounts over the years of a surgery-altered Dr. Mengele, surrounded by armed guards, torturing Indians or serving as the personal physician of President Alfred Stroessner of Paraguay.

Retail sales in May sagged eight-tenths of 1 percent from April, the sharpest drop since last summer, the Commerce Department said today. But some private analysts agreed with the Reagan Administration that consumer demand remained adequate to sustain modest economic growth. ''The expansion still has a green light,'' Commerce Secretary Malcolm Baldrige said.

A picture caption yesterday with an article about the signing of a treaty admitting Spain and Portugal to the Common Market misidentified Giulio Andreotti. He is Foreign Minister of Italy.

The Administration announced today that it would seek a $250 million increase in economic aid to Jordan as a show of support for what it said were King Hussein's efforts to move toward peace negotiations with Israel. But because of strong Israel-backed opposition in Congress, President Reagan today deferred any decision on a military aid package for Jordan, White House officials said. Mr. Reagan telephoned King Hussein, who is in London, to tell him of his continued backing but to explain his reluctance to seek the arms aid now. Richard W. Murphy Jr., Assistant Secretary of State for Near Eastern and South Asian affairs, was also sent to London to meet with the King.

Stocks tumbled yesterday for their third decline in a row, hurt in part by lingering fallout from a projection of lower profits at I.B.M. The Dow Jones industrial average lost 16.24 points, to 1,290.10, closing below the 1,300 mark for the first time since May 23. The Dow transportation average fell even more sharply, losing 12.53 points, to 629.68, largely on weakness among airline stocks. That was caused in part by profit taking after the group's recent strong showing. Volume on the New York Stock Exchange expanded to 107 million from 97.7 million on Wednesday.

FRIDAY, JUNE 14, 1985 Companies Texas Air agreed to buy Trans World Airlines for $793.5 million. The purchase would create the nation's second-largest airline operation, after United, and one with extensive international routes. It would also put new pressure on fares if T.W.A. adopts the pricing policy pioneered by Texas Air's Frank A. Lorenzo at his Continental Airlines subsidiary. T.W.A. would retain its name but eventually, analysts say, it and Continental would probably integrate their operations. Carl C. Icahn, who has 32.77 percent of T.W.A.'s stock, stands to make a profit of about $50 million. [Page A1.] Burroughs and Sperry are talking of merging. A combination would form the world's second-largest computer company, after I.B.M. Investment banking sources said the negotiations revolve around a takeover of Sperry by Burroughs, with Sperry valued at more than $3.74 billion. But some analysts were skeptical about the benefits of a merger, and the stocks of both companies fell. [D1.]

The police searched yesterday for the proprietor of a small Brooklyn grocery store who fled Wednesday night after three teen-agers were shot to death and a fourth was wounded in a dispute over payment for a can of soda. The suspect - identified as Ali Nagi, 27 years old, a naturalized American citizen from Southern Yemen - disappeared immediately after the shooting. The incident took place at 10:30 P.M. in the Imperial Supermarket, a 24-hour delicatessen-grocery store at 65 Lafayette Avenue in the Fort Greene section. The dead youths, who lived in the neighborhood, were identified as Sean Kibbler, 16, of 261 Cumberland Street; Gary Feldman, 14, of 268 Ashland Place, and Pierre Fautin, 18, of 301 Cumberland Street.

JOYCEANS rejoice Sunday. It is the anniversary of the day in 1904 when Leopold Bloom took his epic walk through Dublin in James Joyce's ''Ulysses,'' and flights of actors will gather at Symphony Space at Broadway and 95th Street to read from that novel and other works of Joyce between 1 and 5 P.M. in the ''Bloomsday on Broadway IV'' celebration. Since it is Father's Day as well, all the passages to be read concern fatherhood, begetting children, being born or being a child or parent. More than 40 actors to entertain the occupants of the 900 seats in the auditorium? Not them alone; the Radio Foundation will broadcast the show live on WBAI-FM locally and feed it via satellite to all National Public Radio stations.

THE CLEARWATER, the boat whose name is the message, is a 106-foot reproduction of the sloops that made the 19th-century Hudson River a highway for commerce, ''apple cider and pumpkins, strawberries and corn,'' as the song says, not to mention cement, furs and machinery. In her 16th season, the Clearwater is one of an increasing number of vessels that offer guests a boat ride, and then some. Although the singer and activist Pete Seeger was a prime mover when the Clearwater was launched, she is now owned by the 7,000 people who contribute to her support. The Clearwater's cargo is information, the history of the river, its biology and chemistry, its creatures, the lore of sailing, the state of the estuary's environment. She delivers it most of the time to groups of 40 pupils, Cub Scouts and alumni groups.

Trans World Airlines Inc. said yesterday that it had agreed to be acquired by the Texas Air Corporation, which owns Continental Airlines and New York Air. The $793.5 million deal, which was approved unanimously by the boards of both companies, would create the nation's second-largest airline network, after United Airlines. The combination could also create new pressure for lower air fares, industry analysts say, especially if T.W.A. adopts the competitive pricing policy that Texas Air's pioneering chief executive, Frank A. Lorenzo, introduced at Continental and New York Air. Independent Operation Texas Air said T.W.A. would retain its name and operate independently under its current management and board of directors. Analysts, however, expect Continental and T.W.A. to integrate their operations eventually.

Friday EARTHLY DELIGHTS IN DANCE Moving Earth, the dance company headed by Kei Takei, an avant-garde dancer and choreographer, performs this weekend at La Mama E.T.C. The program will feature ''Light, Part 20'' and ''Light, Part 21,'' both choreographed by Miss Takei, and ''Evocations,'' which was choreographed by Miss Takei and designed by Tetsu Maeda. Performances at La Mama E.T.C., 74A East Fourth Street, are at 7:30 P.M. Tickets are $12 tonight and Saturday and $10 on Sunday. Information: 475-7710.

President Reagan, in a spirited response to critics of his tax plan, said today that the proposals do not favor one state over another and would not harm taxpayers in high-tax states such as New York. The President spoke at an outdoor rally to several thousand cheering, flag-waving enthusiasts in front of the Municipal Building here. Bloomfield is about 15 miles from New York, where Mr. Reagan's proposal to end the Federal deduction for state and local taxes has aroused vehement criticism. Governor Cuomo of New York is a leading opponent of the provision, which Administration officials have called vital because of the revenue it would provide to help offset tax cuts the Reagan plan proposes elsewhere.