A monthly federal economic report reveals that Arizona is still mired in a recession while other states are on the road to recovery, according to an Associated Press story on the KPHO/Channel 5 Web site. The report cites an 11 percent decrease in tax collections, rising unemployment and housing market woes.

The Arizona Republic story a week ago (which we blogged about) claimed that the real estate market was stabilizing. The report cited the findings of an ASU professor who created an index based on a sampling of homes that had been sold several times in recent years. We cautioned that the imminent number of foreclosures that will hit the market in the coming months could render that finding useless.

This new report only adds to our argument; unemployment is rising and state projections for tax collections in July were well off the mark. In addition, the two largest employers in Arizona are state-run universities, who could face greater cuts in funding and more layoffs. All of this—rising unemployment and less tax revenue—points to more people facing major financial trouble, placing more stress on the Phoenix real estate market.

West Valley cities have some elements that are resistant to the recession. For example, Goodyear is home to new spring training facilities for the Cleveland Indians and Cincinnati Reds and satellite campuses for institutions of higher learning. These entities will bring revenue from outside of the city and state to local businesses while easing the tax burden on its residents. Peoria, Glendale and Surprise have similar attractions and institutions that ease the burdens on their residents. Properties are moving in these communities, but median home values have fallen over 50% since June of 2006, according to Information Market, a private, Phoenix-based market analysis firm. Whether or not they continue to fall has more to do with the state’s economic recovery than recent home sale trends.