by Matthew Rusling

U.S. markets are plummeting, and trading was temporarily halted Thursday for the second time this week, amid panic that the coronavirus could cause a global economic slowdown.

Thursday saw U.S. markets take a steep dive over 2,000 points, on fears that the coronavirus could slow the U.S. and global economies. Some experts predict the United States will head for a recession, although it remains unknown how severe a downturn might be -- long and drawn out or just a short, mild decline in business.

In an interview Thursday with The Street, financial guru and host of the CNBC show "Mad Money" Jim Cramer argued "I suspect that we are in recession right now."

Barry Bosworth, an economist at the Brookings Institution, told Xinhua that current expectations are for a short sharp drop in gross domestic product and employment in the second quarter.

"If the coronavirus follows the path of China and (South) Korea, we would expect a v-shaped pattern with recovery in the third quarter," Bosworth said.

Indeed, the daily rate of infection is on the decline in China, and factories there are slowly getting back to work, according to reports.

"Within that framework, there is little reason to expect a long-term loss of economic output, but we do not know if the coronavirus will recede in warmer weather like the seasonal flu. The global economy impacts are likely to be more drawn out as the impact affects more countries," Bosworth said.

The impact on the U.S. economy is concentrated in the retail sector and industries such as sports and restaurants where people are avoiding large crowds, Bosworth said, adding that some factories and other businesses where telecommuting is not practical will also lose in the short-run.

A vaccine is expected to be available by the fall, but wide-spread distribution will take time and the travel industry will be impacted for many more months. Global supply chains are likely to face disruptions into 2021, Bosworth said.

WORSE SCENARIO

Other economists predict more of a gloom and doom scenario.

"I am afraid that we are in for a very meaningful global and U.S. economic recession," Desmond Lachman, a resident fellow at the American Enterprise Institute, told Xinhua.

"Prior to the coronavirus scare, we had global equity valuations that were very high by historical standards and a global credit market that seriously mispriced risk," Lachman said.

"My view is that what is happening is that the coronavirus epidemic has burst the global equity and credit market bubbles. This is bound to deliver a severe blow to both the U.S. and global economies," Lachman said.

Already, the market crash is being compared to the 2007-2008 financial crisis that sparked the Great Recession, which lasted for most of former U.S. President Barack Obama's term.

Economists note that the current coronavirus-led crisis and the factors that led up to the Great Recession are fundamentally different.

The Great Recession was a result of financial imbalances-starting primarily in the housing sector -- a sharp difference from the current crisis, which was started by a threat to public health, Brookings Institution economist Louise Sheiner noted in a blog published Thursday on the think tank's website.

"Nonetheless, these are very early days and there is a huge amount of uncertainty. We don't know how bad the health effects from the virus will be or how long they will last, how many countries will be affected and to what degree, what kinds of disruptions to production might ensue, whether the economy will spiral down if this lasts a long time," Sheiner argued.

"The post-2008 focus on promoting financial stability has left us in better shape to weather a downturn," Sheiner said, pointing out that banks have much more capital than they did before, and that the Federal Reserve and other financial regulators have learned how to step quickly to ensure that credit markets function smoothly.

"Hopefully, we also learned that economic downturns are very costly, and that fiscal stimulus, (such as) spending increases and tax cuts, can cushion the blows to households and businesses," Sheiner said.

"With interest rates extremely low-inflation-adjusted, or real, interest rates are negative-there is little cost to borrowing heavily and doing what turns out to be too much. On the other hand, there is a tremendous cost to underestimating the extent of the problem and doing too little," Sheiner said.