January 7, 1981

The New York City Department of Health said yesterday that the flu that arrived here in November had reached epidemic proportions and that it would probably get worse in the next two weeks. Hospital clinics and emergency rooms throughout the city, particularly in the Bronx, were reported crowded with patients suffering from what has been designated as the A-type Bangkok strain of influenza, a relatively new type of flu virus isolated in Asia two years ago. Like other strains of flu, the Bangkok variety produces fever, headache, runny noses, body aches, sore throats and sometimes nausea and vomiting.

Ayatollah Ruhollah Khomeini gave his approval last night to Algerian assistance in efforts to release the 52 American hostages, raising new hopes for a solution to the 14-month-old crisis with the United States. The Ayatollah's endorsement - necessary for any major move - was announced during the evening by Prime Minister Mohammed Ali Rajai after a meeting with the revolutionary leader. But the precise terms of the Algerian role and the state of the negotiations remained unknown, and Mr. Rajai's remarks themselves created further confusion and uncertainty. Ambiguous Term Causes Confusion The confusion stemmed from the Prime Minister's use of the Persian word ''tahod,'' which can be translated as meaning either ''undertaking'' or ''guarantee.'' In the context of his remarks, the difference is critical.

Donald T. Regan, Treasury Secretary-designate, predicted today that the economy would decline this year but that ''major improvement'' would occur within 15 months if Presidentelect Ronald Reagan's economic program were adopted. Mr. Regan offered no specific forecast, other than to say that the recovery may be ''aborting'' and that the gross national product, after adjustment for inflation, would probably shrink in 1981. He conceded, however, at his confirmation hearing before the Senate Finance Committee, that the incoming administration's target for a balanced budget had slipped a year, to 1984, as the outlook for the budget deficit has steadily worsened in recent weeks. Carter Administration officials, meanwhile, said today that their projected deficit for 1981 had taken another leap, to nearly $60 billion. Administration and budget experts said that the addition of a tax cut by President-elect Ronald Reagan could push the deficit past the previous record of $66.4 billion set in the final year of the Ford Administration.

The Tandy Corporation is back in Wall Street's favor, just two years after the company's reputation as a star growth company lay in shambles. The abrupt collapse of the citizens band radio craze in 1977 hit hard at Tandy, the market leader through sales in its Radio Shack chain. Net profits declined 4.2 percent in the fiscal year 1978, a disastrous performance for a company that had expanded continuously during the 15 years in which Charles D. Tandy had built the 9-store chain to 7,000 outlets. Some analysts predicted a bleak future for the company, but Tandy executives found a solution to the corporate problems in a new hightechnology consumer product, the microcomputer sold for use in homes and small offices.

German veterans come to bury, and to praise, Doenitz A2 Japanese Prime Minister plans trip to 5 Southeast Asia nations A3 Senator Stevens and Chennault meet with Taiwan's President A3 United States reporter is missing in El Savador A3 Around the World A5 Kissinger urges enhanced U.S. military presence in Mideast A6 Iran says its troops are expelling Iraqi invaders A8 Egypt bars Israeli paper's reporters over an article A9 American labor has collected $160,000 for Polish union A12 Government/Politics Extension of child support enforcement provisions urged A14 Three Reagan Cabinet nominees breeze through Senate hearings A16 Prosecutor in upstate inquiry on corruption resigns B4 Reagan panel urges options on mass transit for handicapped B5 General Around the Nation A14 Developer of skyscrapers buys blockfront on Third Avenue B3 Unusual cold has contributed to at least three deaths in city B3 John Durniak joins Times as picture editor B4 Obituaries Irving Abramson, labor lawyer and union organizer B5 Frederick Osborn, Army general and former U.N. deputy B12 PARKING REGULATIONS Alternate-side parking regulations are suspended throughout New York City today because of the snow, the Transportation Department said. The Living Section Food For the American steak, a gilded age is fading C1 A chef and teacher starts a new life C1 Food processor battle is joined C1 Kitchen Equipment C2 60-Minute Gourmet C3 Pseudo food: It looks good enough to eat C3 Best Buys C9 Wine Talk: Brunello di Montalcino gets guarantee C13 Living Down coats cause problems in checkrooms C1 Metropolitan Diary C2 Personal Health: Raynaud's disease C10 Impact of poverty on black children cited C12 Discoveries C12 New Yorkers, etc. C12 Arts/Entertainment They nearly brought 'Frankenstein' back to life C15 National Film Critics name ''Melvin and Howard'' best film C16 Musical comedy wins first Richard Rodgers Award C16 ''Housekeeping,'' novel by Marilynne Robinson, is reviewed C18 New Federal Theater stages ''The Trial of Dr. Beck'' C18 Wildlife documentary filmed in South-West Africa on PBS C20 True Witness Ministries seeks WNYC-TV's license C20 Sports Colgate Series and Masters in tennis spotlight B6 Bucks turn back Nets, 102-86 B6 Islanders triumph over Maple Leafs, 6-3 B7 Knicks lose to Spurs, 113-108 B7 Tracy Caulkins rules the swimming world B7 Giants discharge Hawkins and Pollard, members of coaching staff B7 Survival is main topic at A.I.A.W. convention B8 B2 Oilers' manager suggests Phillips may be tampering with aides B8 Red Smith on how Landry gets the close ones B9 Features/Notes Man in the News: James Brady, choice for press secretary A15 Notes on People B4 News Analysis Steven Roberts discusses conservative coalition in House A15 Editorials/Letters/Op-Ed Editorials A18 Wrong hail to the chiefs Keeping water in mind The Iowa debate, still Topics Letters A18 James Reston: who's in charge during the transition? A19 Russell Baker: bliss among the coconuts A19 Gar Alperovitz and Jeff Faux: to avoid an 'economic Dunkirk' A19 Sue Nichterlein: educating the Spanish-speaking population A19