Gabriel Gomez scored to level the score before halftime for Panama (1-1-2), which is now one spot ahead of the U.S.in the standings and in search of its first-ever World Cup bid.
Dempsey, who scored a hat-trick on his return to worldwide football against Honduras last week, tucked away a 39th-minute goal after a superb run by Borussia Dortmund's Pulisic.
However, Panama drew level in the 43rd minute after a long throw-in fell to Gomez in the area with the midfielder powering the ball past a helpless Howard.
While former MLS Star and familiar face Blas Perez is out of the squad with injury, Panama still has all-time leading goal scorer Luis Tejada to lead the line up front, while Alberto Quintero, his club teammate at Universitario is a formidable right winger.
"It was just a battle". The referee was unforgiving with his decisions most of the night. The hat trick from the Texan was a stunning end to a long journey back to football, but after playing 90 minutes it might be hard to repeat an effective performance.
"I've been very encouraged", Arena said, "by what I've seen over the last 10 days". It would be a very physical game from the start and the U.S. would need to work hard all night to get a result.
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"The environmental conditions - the heat, the humidity, the surface of the field - combined with the physicality made it a real rough game". His injury time goal four years ago for the already qualified USA eliminated Panama from advancing to a playoff against New Zealand.
While in their qualifying group table 2018 U.S. team ranked fourth. Under the leadership of the new-old coach, the Americans held three matches, never missing in them: Serbia 0-0, Jamaica 1-0 and finally the game of selection with Honduras 6-0.
The game opened up in the second half and Panama looked risky, Howard needing to get down low to keep out Tejada just before the hour-mark. We obviously plan on taking some points [away from home]. We have to praise Clint Dempsey, Christian Pulisic, and Jozy Altidore, before talking about Michael Bradley's game.
Dempsey, 34, again collaborating with the savant Christian Pulisic, gave the US a 1-0 lead at Estadio Rommel Fernández on Tuesday night.
Arena did express disappointment at the manner of the goal the Americans conceded, which he called, "a little sloppy".
The US national soccer team has a good chance of cracking the final list for the 2018 FIFA World Cup in Russian Federation.
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The U.S. manager also praised the play of Pulisic, who was the target of some physical play from Panama, even though he officially was only fouled twice. He did well. It is a good lesson for him.
"I think Panama thought there was a bull's-eye on his back and went after him from minute 1", Arena said.
"Going into it I knew it was going to be a physical game, and the way I play, the style I play, it's pretty normal for me to get kicked around a few times". And I think he did well.
Defender Jorge Villafaña - 6: He played well all night, but especially after Andy Najar entered in the second half and repeatedly tried to attack down his side.
"But a good lesson for him". Maybe that was exactly the flawless environment for him, you could argue that. "Everyone watches film and takes notes on players and are going to do whatever they can to try to frustrate them". That game saw them click well as a side and they were led well with the youth of Christian Pulisic and the more experienced names that were also in the side.
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