Relative optimism toward the Texas economy is beginning to waver according to recent reports from the Dallas Federal Reserve.

In online updates published during the first week of December the Dallas Fed revised downward its official figure for second quarter 2008 employment growth in Texas -- "from an annual rate of 2.4 percent to 1.4 percent."

Throwing a spotlight on the Houston economy, the Dallas Fed sees the city falling into the national downturn.

"Just how hard Houston’s landing might be depends on how much further and how fast oil prices decline in coming weeks," says the Dallas Fed report of Dec. 4.

Oil prices last week fell to a four-year low of about $40.

While home and auto sales in Houston have recovered from hurricane Ike lows, they are still straggling behind last year's comparisons.

Petrochemical industries are running low: "Weaker economic conditions are now pressuring selling prices and margins for ethylene and other products and are forcing plants to reduce production runs or close to work off excess inventories."

This month's downward revision of Texas job growth breaks a 15-quarter trend of upward revisions.

Says the Dallas Fed, "There is no guarantee that the next revision will also be negative, but the chances of that happening appear greater."

Whether by air, sea, or land, says the Dallas Fed Beige Book for Dec. 3, transportation sectors are slowing in "the eleventh district":

"Airlines report that business demand has declined and future bookings suggest continued weakness over the next several months. Demand for barge services has slowed and contacts said they expect conditions to weaken further in the months ahead. Intermodal services and railroads reported decreased volumes. Railroads said that there were significant declines in shipments of construction-related materials, autos, pulp and paper, petroleum products and chemicals."

Agriculture suffered losses of $1 billion from hurricane Ike and, "Crop and cattle prices have plummeted."

In relation to the broader downturns in the US economy, Texas may be behaving more like another country. On Dec. 1 a Dallas Fed "Economic Letter" shows that the global economy has not been decoupled from the US.

"No longer do other countries catch a cold the moment the U.S. sneezes. They do catch a cold, but the onset is much slower and the effect is longer lasting."

If the onset of economic difficulty has come to Texas "much slower" like it has to other countries, then could the hard news be that the shock will also be "longer lasting"? -- gm