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That is according to a report released by economists with the UCLA-Anderson Group, which examined the economy and its recovery.

"We see more rapid job growth in San Diego than California as a whole and in the U.S. as a whole," said Jerry Nickelsburg who is with the Anderson Group.

Nickelsburg estimates California's unemployment rate will be hovering near 12 percent by 2013. By comparison, San Diego will be at 8.5 percent.

According to the report, what cushions San Diego is the presence of the biotech and military industries.

As for real estate, housing starts will still be slow, but Mark Marquez of Weichert Realtors said the short sale markets and the entry-level market will remain strong for the next two to three years.

"The entry level is very solid and with the banks beginning to open up, we are beginning to see jumbo loans for the $1 million and up market," said Marquez.

Nickelsburg said the main challenge for San Diego and for the country will be to encourage small business startups to expand as already established businesses.