February 22, 1982

Coach Red Holzman was forced to go to his bench early yesterday and to use players who have not produced recently. The move did not pay off immediately, but by the time the Knicks defeated the Houston Rockets, 122-106, at Madison Square Garden, Marvin Webster, Larry Demic, Randy Smith and Sly Williams had made major contributions to help end the team's four-game losing streak. The loss was only the Rockets' second in the last 12 games. Webster, who finished with 10 points, played 15 minutes of tough defense against Moses Malone, who nevertheless scored 30 points. With Maurice Lucas in early foul trouble, Demic guarded Elvin Hayes aggressively and forced him into an 8-for-20 shooting performance. Smith, playing the point guard for many of his 38 minutes, equaled his season high of 26 points, and Williams, missing only three shots in 13 attempts, scored 23 points.

The nation's governors today rejected the Reagan Administration's appeal to put their unhappiness with President Reagan's proposed budget out of their minds when they consider his ''new federalism'' proposals. But the Governors did agree to deal with those proposals without considering the overall problems of the economy, a tactic that some Democrats insisted Saturday was impossible. They also ruled out taxes and military spending as topics at the annual winter meeting of the National Governors Association. The decisions came on unanimous votes in a closed meeting attended by about 44 Governors. The participants also decided that, before their conference ends Tuesday, they would probably offer counterproposals to Mr. Reagan's suggestions for exchanging Federal and state responsibilities.

Consumers now look at cars more as transportation appliances than as an expression of their success in life, and this has made them more practical and intensely price-sensitive. That is the consensus that emerges from discussions with auto dealers attending the annual convention of the National Automobile Dealers Association here. The group has once again urged auto makers to convert their current rebates into permanent price reductions to stimulate sales. ''People see cars as things now,'' said Hugh Greer, owner of a Toyota-Subaru dealership in Wappingers Falls, N.Y. ''They come in and say, 'I'm going to keep this thing for 10 years.' There aren't many people anymore who plan to trade in their car every two or three years.''

Ice-skating in a lavish air-conditioned rink has emerged as a year-round fad in this desert emirate, where summer temperatures regularly soar to 125 degrees. Such extravagence befits a country where the area around the swimming pool of a luxury hotel is air-conditioned so sunbathers stay cool while tanning, exotically designed multimillion dollar villas sprout weekly along palm-lined boulevards and the per capita income has jumped to more than $20,000, about twice as much as in the United States. Lately, however, there are stirrings of trouble in Kuwait. After years of avoiding the problems plaguing less oil-rich economies, Kuwait is facing trade deficits and significant cutbacks in Government spending, and may have to dip into its financial surplus.

Mayor Koch will announce his candidacy for the Democratic nomination for Governor today, City Hall aides said yesterday. The scheduled announcement at a Gracie Mansion news conference comes after several weeks of speculation about Mr. Koch's intentions, fueled by the Mayor's public comments and reports of his private meetings with friends and advisers. Over the past several years, and as recently as last month, Mr. Koch said that he would never seek any office other than the mayoralty. In November he was overwhelmingly re-elected to a second four-year term running as a candidate of both the Republican and Democratic Parties. Last week, at the annual dinner of the Manhattan Republican organization, Mr. Koch said that, if he ran for Governor, he would not seek the Republican nomination.