Financial markets have slumped — the S&P 500 is down 30 percent since Feb. 18. But now it appears the economic destruction in the wake of the global COVID-19 pandemic has jumped from paper to the actual economy.

Economists at Goldman Sachs Group Inc. and Morgan Stanley declared Tuesday the global economy is in recession.

Southeast Michigan's reliance on the automotive sector, which is particularly exposed to softening economic conditions, will likely result in a tougher recession for the region.

"It's not looking good at all," Charles Ballard, an economist at Michigan State University, told Crain's before the New York firms declared a global recession. "Even before the virus, Michigan's economy was already very soft and it won't take much to push Michigan into recession. The Michigan economy has been growing more slowly than the overall U.S. economy for the last few years, and especially slowly in the last year."

Between December 2018 and December 2019, Michigan only added 19,500 jobs, well below the growth rate of 43,000 jobs per year in 2017 and 2018.

The auto sector began to slow well ahead of the COVID-19 outbreak that began in China in late December 2019 and escalated in January. Southfield-based IHS Markit predicted in early February that the then-idled Chinese auto market would knock about 1.7 million units off production schedules and cost the industry billions.

That prediction now seems trivial as the outbreak has all but halted European production — Fiat Chrysler and Volkswagen temporarily closed most plants this week. Ford on Tuesday announced it's halting vehicle and engine production in continental Europe for a few weeks.

Here stateside, the loss of a single week of auto sales in the U.S. could have staggering ripple effects on the broader economy, according to data from the Center for Automotive Research in Ann Arbor.

For every seven-day period that consumers stop buying new vehicles, the U.S. economy would lose roughly 94,400 jobs and $7.3 billion in overall earnings, Kristin Dziczek, the center's vice president of industry, labor and economics, told Automotive News. Government tax receipts would drop about $2 billion, she said.

A significant drop in demand is likely as much of the country hunkers down and practices social distancing to slow the spread of the virus, Dziczek said, because of the discretionary nature of new-vehicle purchases. Even after the crisis passes, the auto industry may be slower to recover because vehicles cost more than other purchases consumers are likely to delay.

"If on the other side people don't want to buy cars, we have a real problem," she told Automotive News.

The impact could be far greater if plants across North America, which are largely interconnected in the supply chain, are forced to close down by local or federal governments or do so voluntarily as they've done in Europe.

Conflating the issue is that plants can't test workers to assess whether the coronavirus has spread into factories or offices. General Motors Co. confirmed Tuesday that an employee at its Warren Tech Center tested positive for COVID-19.

"It would be easier for them to feel confident about continuing production if they could test every worker, but they can't," Ballard said. "Perhaps they swab every surface in the factory with Clorox repeatedly? And that's even if they don't have a supply chain that has been disrupted by events in China. Quite apart from the problems in producing, there is the question of demand. If you are manufacturing toilet paper, bottled water, hand sanitizer or frozen pizza, we're pretty sure you face strong demand. But if you are producing cars, there is reason to believe that consumer demand is shrinking substantially."

Auto production could decline 16 percent in 2020, fueled partially by an expected 20 percent decline in U.S. sales, according to Wall Street firm RBC Capital Markets.

The sales loss expectations are fueled by the mass shrinkage in economic activity from travel, hotels, restaurants, bars, conference venues, sporting venues and other related sectors as the virus continues to spread through the U.S. and region — there were 54 confirmed cases in Michigan as of Tuesday afternoon.