By Rebecca Go
The San Diego Daily Transcript

January 13, 2009

Economic forecasts graced the agenda for the local City Club and Rotary Club last week, with experts
offering a mix of good and bad news for the year ahead: Although much is still unknown, expect
continued cloudy weather, with a chance of financial sunshine in mid- to late 2009.

Featured speakers at Friday’s City Club event, which focused more on the regional outlook, were
especially bullish on the San Diego economy, citing geographic location, rapidly rebounding industries
and long-term growth in the local real estate market.

“If we grow like SANDAG thinks we’re going to grow in the next 20 years … the chance of us really
bidding up (real estate) value quickly and seeing a much quicker recovery is much higher,” said Gary
London of local consulting firm The London Group.

Experts also pinned hopes on the nearly $800 billion federal stimulus package, with its expected tax
credits for businesses and grants for local governments.

Much of the package, however, is slated for state governments, said Ruben Barrales, president and chief
executive of the San Diego Regional Chamber of Commerce.

Barrales, who met with congressional leadership in Washington, D.C. before his City Club talk, expressed
some concern over how the state would choose to spend the funds and whether enough details would
be provided.

“That’s one of the scariest things for local officials to hear: The money is going to the state to distribute,”
Barrales said. “The good news for San Diego is that we are very good at competing on a statewide level”
for funding.

In terms of the local real estate market, London and other experts agreed that improvement is a long way
off, but maintained that the San Diego’s location paints it as a highly desirable market.

According to London, the region is less overbuilt than other areas, with more than 1,500 unoccupied
homes -- compared to more than 20,000 in Miami and Las Vegas.

“As long as the population grows -- there’s not going to be more land made -- real estate will always be
the best investment long-term,” said Gina Champion-Cain, president and chief executive of American
National Investments.

To accommodate such growth, the San Diego region needs to expect to build up rather than out, and the
subsequent challenge is supplying amenities and overcoming stigmas attached to density housing,
London said.

Financial experts at the Rotary Club’s 19th annual economic forecast event on Thursday also were
cautiously optimistic for 2009, but focused more on the national economy and U.S. markets.
“We’ll see a positive return in 2009,” said Linda Stirling, senior vice president at RBC Wealth
Management. “It’s just going to take some time.”

Stirling and stockbroker Bill Holland both predicted that the year’s gains would propel the Dow Jones
industrial average above 10,000, with Stirling setting her benchmark as high as 10,500.

Both also urged their listeners to avoid sitting on the sidelines for too long, noting that investors will
have missed their opportunity if they wait for positive financial news.

A sign of improvement will come from corporate bonds, they agreed, as investors -- buoyed by better
headlines -- start looking for higher returns instead of hiding in U.S. government bonds.

The future will bring deficit spending, higher taxation and more stringent regulation from the Securities
and Exchange Commission.

Holland, who lashed at the SEC for its failure in the Bernard Madoff scandal, said he would welcome the
greater regulation.

“The hedge funds hurt my clients, too,” he said, also criticizing financial tools such as mark-to-market and
short selling for exacerbating the crisis.

Surviving companies would be “brawny,” Stirling said, with strong cash flows, low debt ratios and little
leverage. She named Qualcomm (Nasdaq: QCOM) as one of her company picks.

Experts at both forecasting events disagreed on what sector would be the next to fail -- the next “shoe”
to fall. Answers ranged from pinpointing retail to auto to commercial real estate.