There had been some talk in the state capital of Sacramento that tax refunds could be delayed, as they were temporarily last year, to help the state government preserve cash while Schwarzenegger and lawmakers tackle closing a state budget gap of $20 billion.

The state’s cash position, however, is better than expected, according to Chiang’s office.

“Revenues came in above projections for the third month in a row, continuing a positive trend that shows California is on the road to recovering from the recession,” Chiang said in a statement.

“Given February’s numbers and recent action from the Legislature to improve the state’s cash flow, Californians should expect to receive their hard-earned tax refunds on time,” Chiang added.

The controller, as he routinely does, urged a speedy budget agreement that balances the state government’s books, something that Wall Street rating agencies, which have the state’s credit rating just a few notches above “junk” status, would also like to see.

“While the worst may be behind us, we still face cash challenges later in the summer absent enactment of further credible and sustainable budget and cash solutions,” Chiang said.

According to Chiang’s office, California’s year-to-date receipts are ahead of budget estimates by $1.94 billion, or 3.9 percent, and the state government’s cash position was $2.15 billion ahead of projected levels on February 28.

Chiang released his revenue report as the second day of a two-day retail order period for a $2 billion general obligation debt sale by California neared its close.

As of Wednesday afternoon, California had recorded orders for $1.38 billion of the tax-exempt debt as individual investors looked past the state’s budget troubles, according to analysts. Commercial Loan Workout.

Executives at JPMorgan Chase & Co (JPM.N) and Goldman Sachs Group (GS.N) have talked in public and to regulators about the possibility of returning cash to investors after measures to retain capital in the wake of the global credit crisis, the FT reported.

However, those plans may be delayed if regulators oppose those moves, the newspaper said.

“Regulators are gun-shy at this stage, partly because they fear that giving the green light to healthier banks to return cash to investors would prompt demands from more troubled institutions to do the same,” one senior Wall Street executive told the Financial Times.

Sources familiar with the situation said government agencies, including the New York Federal Reserve and the U.S. Treasury, told banks they would have to wait until the economic and legislative landscape became clearer before banks could follow through with plans to return funds to investors, the newspaper said.

A JPMorgan representative didn’t immediately return a message seeking comment, and Goldman Sachs declined comment. Commercial Loan Workout.

The Federal Statistical Office said 2,583 companies filed for bankruptcy protection in the last month of 2009.

The year-on-year increase compared with a smaller 6.9 percent rise in November, but was in line with big increases in the two previous months.

Corporate bankruptcies were up 11.6 percent for the whole of 2009 over the previous year, with a total of 32,687 bankruptcy filings registered.

That was the first time since 2003 that the number of companies going bust rose from the previous year, the statistical office said. Overall, bankruptcies still fell short of the 2003 total of 39,320.

Germany’s economy — Europe’s biggest — returned to modest growth last year after a sharp recession, but stagnated in the fourth quarter.

The head of Germany’s central bank, the Bundesbank, was optimistic Tuesday about the outlook, noting that a strengthening global economy is good news for German exporters.

“I firmly believe that the recovery process … is essentially intact and that it will continue despite the slower pace of growth in the final quarter of last year and the first quarter of 2010,” bank President Axel Weber said in a statement.

Weber said that “the German labor market continues to be in extremely robust shape.”

Germany’s unemployment rate stood at 8.7 percent in February. It has been kept in check over recent months by a government-backed program that allows companies to put workers on reduced hours in an effort to avoid layoffs.

The Bundesbank said its profit declined to euro4.1 billion ($5.6 billion) last year from euro6.3 billion in 2008 as low eurozone interest rates pushed down interest income. Commercial Loan Workout.

In the deal announced Monday, MetLife will pay $6.8 billion in cash, and the rest in stock and equity units.

The cash portion of the sale will be used to reduce a $47.9 billion investment in AIG by Federal Reserve Bank of New York.

“With this sale of Alico, along with the sale of AIA to Prudential PLC announced last week, we are on track to generate approximately $50.7 billion from these two transactions alone, consisting of approximately $31.5 billion in cash to repay the FRBNY, plus another approximately $19.2 billion in securities that we will sell over time to repay the government,” said AIG Chairman Harvey Golub. “Both sales give AIG greater flexibility to move forward with our restructuring and rebuilding efforts.”

AIG owes the government almost $130 billion in bailout funds, including $47.3 billion owed to the U.S. Treasury and $34.5 billion in assistance tied to the value of investments the New York Fed bought to prop up AIG.

The deal will give MetLife a larger presence in Japan as well as high-growth markets in Europe, the Middle East and Latin America.

Alico, which operates in more than 50 countries, is the second international unit AIG has sold this month. On March 1, AIG said it would sell a cornerstone of its business, Asia-based life insurer AIA Group, to Britain’s Prudential PLC in a government-approved $35.5 billion deal.

AIG and MetLife are based in New York. Commercial Loan Workout.

“I think we’re going to get through this,” said Charles Whiteman, a University of Iowa economist who sits on the governor’s Council of Economic Advisers. “I can see light at the end of the tunnel.”

Whiteman spoke with Creighton University economist Ernie Goss during a taping of the public television program “Iowa Press.”

Whiteman speculated that Iowa residents should see some economic improvements within a few months.

“Nationally I think we’re kind of there,” he said. “We went in late in Iowa and we’re going to come out late.”

That would put the projected recovery starting in the middle of the summer, coinciding with the beginning of the state’s new budget year on July 1.

There already have been some signs of a recovery in Iowa, said Whiteman, noting that businesses have begun lengthening work shifts and having employees work more overtime. Still, businesses haven’t yet increased hiring enough to cause the state’s 6.6 percent unemployment rate to fall.

Goss said employment traditionally is a lagging indicator, with numbers improving only after business confidence increases. The same can be said for state tax collections, he said.

“Our leading economic indicators are pointing higher,” said Goss. “If you’re talking about state tax collections, that’s even more of a lagging indicator.”

He predicted that state tax collections will be flat throughout the spring but start picking up about the middle of the year.

Later Friday, Whiteman gave his message in person to Culver, who listened in to a discussion by the economic advisers panel. Culver told the panel that “hopefully there will be some pretty positive news” as the economy improves later in the year.

Next week, the state’s Revenue Estimating Conference will issue its projection of what the state will collect in taxes. Lawmakers and Culver are required to use those figures as they build the budget for the fiscal year beginning July 1.

Projections at the beginning of the session showed a roughly $341 million shortfall in next year’s budget, and legislators have moved ahead plans to cut costs and dip into cash reserves to balance the budget. If the Revenue Estimating Conference lowers its projection of tax revenue, lawmakers and the governor will have to go back to work finding more cost savings.

Legislative leaders and the governor have promised not to increase state taxes. Commercial Loan Workout.

The Fed reported that daily borrowing from its emergency loan program averaged $13.77 billion for the week that ended Wednesday. That was down from average borrowing of $13.96 billion in the previous week.

At the height of the financial crisis, emergency borrowing from the Fed’s discount window exceeded $100 billion a day.

The Fed last month boosted the interest rate it charges on discount window borrowing by a quarter-point to 0.75 percent as part of the central bank’s efforts to unwind the exceptional support that had been provided during the financial crisis.

The central bank is phasing out a number of emergency programs that it had created to deal with the financial crisis that struck with force in the fall of 2008.

The Fed’s balance sheet — a broad measure that tracks the Fed’s lending activities — stood at $2.28 trillion for the past week, more than double the level before the financial crisis began even with all the moves to phase out various emergency programs.

The central bank’s holdings of mortgage-backed securities averaged $1.03 trillion for the week ending Wednesday, a slight decline of $5.9 billion from the previous week’s average.

In testimony to Congress last month, Federal Reserve Chairman Ben Bernanke said that these holdings might fluctuate but that the Fed’s goal remained to hit a level of $1.25 trillion in mortgage securities from Fannie and Freddie by the end of March.

At that time, new purchases will cease but the Fed, Bernanke has said, intends to maintain those holdings in a continued effort to keep mortgage rates low and support a recovery in housing.

Freddie Mac said Thursday that its national survey showed 30-year mortgages dipping below 5 percent again this week to average 4.97 percent. That is only slightly higher than the record low of 4.71 percent hit in December. Commercial Loan Workout.

Non-farm private payrolls fell 20,000 in February on a seasonally adjusted basis, payrolls firm ADP said, matching the consensus forecast.

“The February employment decline was the smallest since employment began falling in February of 2008,” the ADP National Employment Report said.

ADP revised sharply higher its January number of job losses to 60,000, from an initial estimate of 22,000.

The report came ahead of this week’s highly anticipated monthly government labor report, a key indicator of economic momentum.

Though the economy posted growth in the second half of 2009, snapping a year of contraction, the troubled labor market poses a major challenge to a sustainable recovery from the worst recession in decades.

Unemployment hovering near double digits has left households hunkered down in the face of job insecurity. Consumer spending, which normally accounts for two-thirds of US economic output, has been lackluster.

The Labor Department’s February labor data is widely expected to offer little relief. Most analysts expect the unemployment rate ticked up to 9.8 percent from 9.7 percent in January, with nonfarm payroll losses unchanged at 20,000.

The ADP said that two large blizzards in parts of the East Coast had only a small effect on its survey findings, but warned that the official data from the Labor Department’s Bureau of Labor Statistics, which includes government jobs, would be impacted.

“The adverse weather is widely expected to depress the BLS estimate of the monthly change in employment for February, but boost it for March,” the payrolls firm said.

The ADP survey found that vast services sector created 17,000 jobs, the second consecutive monthly increase in the sector that drives more than two-thirds of US gross domestic product, or output.

But that improvement was not enough to offset continued job destruction in the goods-producing sector, where 37,000 jobs were lost.

In that sector, 3,000 manufacturing jobs were created, the first rise since January 2008.

ADP noted that employment at medium-sized businesses — employing between 50 and 499 workers — rose for the first rise since January 2008.

The increase of 8,000 jobs was modest but suggested that a large portion of the business sector was once again hiring amid a fragile recovery. Commercial Loan Workout.

Fed Vice Chairman Donald Kohn announced on Monday he will retire in June. His departure means Obama has three seats to fill on the Federal Reserve’s seven-member board.

“Obviously they are readying those appointments and going through names. I don’t have a timeline on when those would come yet,” White House spokesman Robert Gibbs said, adding the White House was well aware of the importance of filling the seats.

“We’re very cognizant, obviously, of the vacancies and want to … get those filled quickly,” he told reporters.

Obama’s selections could influence how quickly the Fed raises interest rates and how aggressively it takes on its post-crisis regulatory responsibilities.

Gibbs indicated there might be more information about the process later in the week. The White House has said previously it would nominate Kohn’s replacement in time for confirmation before his term ends on June 23.

A senior administration official said on Tuesday that the president would not announce names this week, however.

“The president has not made any decisions and no offers have been made to fill the vacancies at the Fed,” the official said.

The president’s nominees will require confirmation by the U.S. Senate.

Kohn’s departure gives Obama the opportunity to put his stamp on the U.S. central bank, filling a top slot in addition to two long-vacant governor positions.

Obama, a Democrat, renominated Ben Bernanke as Fed chairman in August, and the Senate approved his nomination in January to a second term, despite a series of contentious hearings.

Republican President George W. Bush named Bernanke to succeed Alan Greenspan as Fed chairman in 2006. Commercial Loan Workout.

The Commerce Department said that personal spending rose by 0.5 percent in January, slightly better than expected. But incomes edged up only 0.1 percent, significantly lower than the 0.4 percent gain that economists had expected.

The income gain was the weakest showing in four months and raised more concerns about whether consumers will be able to keep spending at a sufficiently strong pace to support an economic rebound.

Personal spending jumped by a larger amount than expected in January but Americans’ incomes barely budged. The weak income growth could depress spending in the months ahead, acting as a further drag on the fragile economic recovery.

The Commerce Department said that personal spending rose by 0.5 percent in January, slightly better than expected. But incomes edged up only 0.1 percent, significantly lower than the 0.4 percent gain that economists had expected.

The income gain was the weakest showing in four months and raised more concerns about whether consumers will be able to keep spending at a sufficiently strong pace to support an economic rebound. Commercial Loan Workout.

In its second reading of fourth-quarter gross domestic product, the Commerce Department said the economy grew at a 5.9 percent annual rate, rather than the 5.7 percent pace it estimated last month.

It was still the fastest pace since the third quarter of 2003. The economy expanded at a 2.2 percent annual rate in the third quarter.

Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, growing at a 5.7 percent rate in the October-December period.

While the economy rebounded strongly in the second half of 2009 from the worst downturn since the 1930s, data so far suggests the rapid rate of acceleration slowed somewhat in the first quarter of 2010.

A sharp brake in the pace at which businesses liquidated inventories combined with increased spending on equipment and software to boost growth in the fourth quarter, offsetting lackluster consumer spending and residential investment.

Stripping out inventories, the economy expanded at an annual rate of 1.9 percent, rather than the 2.2 percent pace estimated last month, indicating growth was not being driven by demand.

Business inventories fell only $16.9 billion in fourth quarter instead of $33.5 billion estimated last month. They dropped $139.2 billion in the July-September period. The change in inventories alone added 3.88 percentage points to GDP in the last quarter.

This was the biggest percentage contribution since the fourth quarter of 1987.

For the whole of 2009, the economy contracted 2.4 percent, the biggest decline since 1946, the department said.

In the final three months of 2009, consumer spending increased at a 1.7 percent rate, rather than the 2 percent pace reported in January. That was below the 2.8 percent rate in the prior quarter when consumption got a boost from the government’s “cash for clunkers” auto purchase program.

In the fourth quarter, consumer spending - which normally accounts for about 70 percent of U.S. economic activity — contributed 1.23 percentage points to GDP.

The department confirmed robust spending on equipment and software caused business investment to grow for the first time since second quarter of 2008, despite a drop in spending on commercial real estate.

Business investment rose at a 6.5 percent rate, much faster than the 2.9 percent pace estimated last month. It had dropped 5.9 percent over the prior three-month period.

Spending on new home construction grew at a slower 5 percent rate in the fourth quarter, instead of 5.7 percent estimated last month. It had grown at an 18.9 percent pace in the third quarter.

Both exports and imports grew much stronger than initially estimated in the fourth quarter, leaving a trade gap that contributed 0.3 percentage point to GDP growth, the data showed. Commercial Loan Workout.