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By Mark Jewell, AP Personal Finance Writer

BOSTON (AP) — The stock market has seesawed for a month and a half. It's a reflection of investor uncertainty about prospects for another recession, and whether Europe can contain its debt crisis.

At Columbia Management, strategists say there's at least a 50-50 chance of a recession over the next year. Columbia is one of the nation's largest mutual fund companies, managing some $362 billion in assets.

Columbia's outlook may sound wishy-washy, but it's more pessimistic than conventional wisdom. Leading economists surveyed last month by The Associated Press put the likelihood of a recession at 26%.

Columbia says those odds are rising primarily because recent reports indicate U.S. manufacturing is growing at a slower pace, and may stop growing altogether. That could lead to a recession, generally defined as two consecutive quarters of decline in the nation's output of goods and services.

Even if that doesn't happen, the slow pace of growth since the last recession ended in mid-2009 will persist, Columbia says.

"Whether we enter a recession or not, it will feel like one to most of us," says Colin Moore, chief investment officer at Boston-based Columbia, which is a subsidiary of financial planning company Ameriprise Financial Inc.

In a meeting with reporters this week, Columbia's top strategists explained why they see a recession as increasingly possible:

Negative indicators

Columbia considers surveys of corporate executives who make purchases for their companies to be crucial indicators of where the economy and financial markets are headed. A report from the Institute for Supply Management found that U.S. manufacturing growth was slower in August than its anemic growth rate in July. There has been similar disappointment abroad. Last week, a preliminary reading of a Chinese manufacturing index contributed to a global stock market plunge.

In the U.S., manufacturing has grown every month, with just one exception, since the recession ended. But regional manufacturing surveys from the Federal Reserve have pointed to recent slowdowns. The ISM's next national manufacturing survey, due for release Monday, will be closely watched to see whether manufacturing fell off in September.

History as a guide

After expanding 3% last year, the economy has been growing at an annual rate of 0.7% this year. That's a troubling sign. In every business cycle since World War II, there has been a recession once the growth rate fell below about 2%, according to Columbia Management.

"When growth is this slow, it also becomes more susceptible to financial shocks," Moore says.

Few stimulus tools left

Partisan fighting in Washington has left policymakers with few politically feasible options to reduce the nation's long-term debt, or to take further steps to help the economy regain momentum.

And with short-term interest rates remaining near zero, the Federal Reserve has few additional stimulus options. Last week, the Fed approved a plan aimed at lowering mortgage and other long-term interest rates by reshuffling its $2.9 trillion investment portfolio, shifting from short- to long-term Treasurys.

The program is dubbed Operation Twist. But Columbia's chief economist, Marie Schofield, is so pessimistic that she calls it "Operation Dud".

"We'll give them an 'A' for effort, but the most we expect from this move is a partial offset to the escalating financial tensions rampant throughout the globe," Schofield says.

She warns that the program's emphasis on cutting long-term rates could erode interest income for retirees, pension funds and banks.

European spillover

Europe is at greater risk of slipping into a recession than the U.S. because of debt crises in Greece and other countries. If one of those governments defaults, and a recession spreads across Europe, it will increase the chance of a recession here. Moore noted that Europe accounts for about one-fifth of all U.S. exports.

Corporate bonds

Columbia is cutting back on its investment exposure to Europe's debt crisis by avoiding bond investments in countries like Greece, and in European banks. But the company's top bond strategist, Colin Lundgren, still sees plenty of decent opportunities to invest in U.S. corporate bonds.

U.S. corporations are holding a record amount of cash, and most are earning solid profits, with few of the debt problems that the government and many consumers face, he said. Corporate default rates remain low enough to suggest the economy isn't in a recession. Yet, despite those positives, Lundgren worries that growth is so slow that corporate America is still vulnerable to any debt blowup in Europe.

"This is all very fragile," he says. "That's why we get nervous about reaching a tipping point if Europe slows, and we don't have enough economic momentum to offset that."

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