Answer: Based on your description I think the tree is being affected by a disease problem, probably powdery mildew. This can occur on susceptible plants (such as magnolia) during certain weather conditions. While it is certainly unattractive, it generally will not permanently harm the plant.
To reduce the chance of it recurring next year, be sure to clean up all of the fallen magnolia leaves and any prunings and dispose of them in the trash. Also avoid overhead watering, and avoid watering nearby areas in the evening. Anything you can do to improve air circulation would also be helpful. Here is more information about it you may find iteresting.
If the tree is defoliating completely, you may want to talk to your local county extension and see if they have any control recommendations. They will have the most up to date information on what ot use and how/when to apply it for best results.
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