Texas' bright economy has dimmed somewhat in recent weeks as the state has been hit by the twin blows of the national financial crisis and Hurricane Ike.

"Unknowns on the horizon" have businesses more pessimistic than they were this summer, the Federal Reserve Bank of Dallas reported Thursday.

Texas lost 4,000 nonfarm jobs, the first monthly drop in more than a year, and unemployment crept up to 5.1 percent in September, the Texas Workforce Commission reported Friday. That's slightly higher than the 5 percent in August, but it does not reflect hurricane-related unemployment, which led to a 300 percent increase in claims in the past month. The storm slammed into the Gulf Coast on Sept. 13.

Gov. Rick Perry, who has been bullish on the state's economy, acknowledged that Texas is not likely to escape the national turmoil unscathed. This week, he told state agencies to limit travel and other nonessential spending to prepare for a slowing economy.

The upside, however, is that Texas is in a better position than other states to endure a national recession, economists said.

"Texas is doing better than the nation, but as the nation swings, we are certainly impacted by that," said Keith Phillips, a senior economist with the Federal Reserve Bank of Dallas.

Higher energy prices and strong growth in the high-tech industry are two factors bolstering Texas' economy, Phillips said. Though economic growth is expected to slow, he said he expects Texas to avoid a recession.

Terry Clower, associate director of the Center for Economic Development and Research at the University of North Texas, said he credits the state's resilience to a diversified economy as well as a favorable business climate.

Because home prices did not boom as they did in California, Florida and elsewhere, Texas has not seen a similar bust. That means that foreclosures are having less of an impact on the overall economy here, Clower said.

Meanwhile, the state's budget reserves, which have been plumped up by oil and gas production taxes, should be enough to absorb the economic fallout without draconian cuts in services or tax increases, said Dale Craymer, chief economist of the Texas Taxpayers and Research Association, a nonpartisan, business-backed group.

Many eyes are peeled for signs of what may lie ahead for the Texas economy, and here are some of the indicators under watch:

Sales taxes

"The canary in the coal mine is the motor vehicle sales tax," said Billy Hamilton, a former deputy state comptroller.

It is a volatile tax when the economy is in flux because consumers might buy a cheaper vehicle when money is tight or postpone a purchase until they feel more comfortable financially, Hamilton said.

That figure has been falling since March, according to figures from the Texas comptroller. It decreased 8 percent in September compared to the same month last year.

When that tax drops, Hamilton said, general sales tax collections are likely to follow.

A sustained decline in sales tax collections would be worrisome for state officials because that money makes up about half of the $80 billion in general revenue that pays for key services such as education and the prison system.

For now, sales tax revenues are growing at a respectable clip, though not as rapidly as in recent years, when they were climbing at double-digit percentage rates.

The most recent report showed that collections were up 3.7 percent in September compared to the same month the year prior.

The $2 billion brought in by the state in August, a 7.7 percent increase, was the most sales tax revenue collected in a single month — ever.

For the fiscal year, which ended in August, collections were up 6.6 percent.

Job growth

By looking at indicators such as help-wanted ads and unemployment claims, Phillips is forecasting that job growth will go from the current rate of 2.1 percent to 1.4 percent into next year. "That's pretty weak, but it's still better than the nation," Phillips said.

Unemployment

Texas' unemployment rate is still well below the national one of 6.1 percent, and the 252,000 jobs created in Texas over the past year constitute almost half of the country's new jobs.

Phillips said he expects the unemployment rate to drift upward but not spike sharply.

One big unknown for Texas is how many of the 106,350 Ike-related unemployment claims will be long term.

Many of the claims came from people whose workplace was temporarily closed as a result of power outages in the storm-affected areas, said Ann Hatchitt, communications director of the Texas Workforce Commission.

Those people are probably already back at work and will not need continued assistance, she said. The state will not know the full impact until next month's report.

People who still need help will be tapping into the state's $1.6 billion unemployment trust fund, which is fed by a tax on employers.

Don Baylor — a policy analyst with the Center for Public Policy Priorities, a nonpartisan group that is an advocate for low- and moderate-income residents — said the trust fund is bringing in enough to cover payments now but has not built up substantial reserves during the good times to last through a long recession.

Instead, employers have been enjoying lowered rates and rebates, including $300 million in 2007 and $148 million this year, as dictated by state law.

Baylor said that money would have been best used to build up the trust fund to avoid a repeat of events from the 2002-03 economic downturn, when the state had to borrow $1.38 billion to cover a shortfall and ended up paying more than $108 million in interest payments on the debt.

Hatchitt said the commission is "very confident about the trust fund" and can adjust the tax next year if more money is needed.

The trust fund is now $700 million above the required level and can sustain a safe balance for at least another year, Hatchitt said.

Rick Levy, general counsel for the Texas AFL-CIO, said Texas' system is "upside-down" because it gives money back to employers during flush conditions and takes more money when times are tough.

"It's our job as a state to make sure that, particularly when there are dark clouds gathering, we make sure that we have the means in place to protect ourselves in the event of a storm," Levy said.

There was a time that Texas' economy seemed so rosy that state leaders, including Perry, talked about sending part of the budget surplus back to taxpayers. Back in September, Perry told an audience at a Texas Public Policy Foundation luncheon that the $7 billion that lawmakers did not spend in 2007 should be refunded.

"I happen to think those dollars could have gone to a better use than to be sitting there in a state bank account," Perry said.

The leftover money in that account, which is now nearly $12 billion, is a major reason why legislators should have enough cushion in the budget to absorb a downturn, Craymer said.

But Eva DeLuna Castro, a budget analyst with the Center for Public Policy Priorities, said the state's service needs, particularly during a downturn, would far outstrip what is available. "They're looking backwards; they're not looking forwards," Castro said. "An economy that isn't generating enough to prepare us for the future also is a problem."

kalexander@statesman.com; 445-3618