The credit crunch and other economic woes look set to take a greater toll on the U.S. ad economy this year than was previously expected, and it's showing its face in ad spending on luxury goods.

ZenithOptimedia has cut its forecast for U.S. ad spending for 2008 for the second time this year.

The company now expects a growth of 3.4 percent, down from the 3.7 percent forecast in March. Back in December, the media buying giant had anticipated growth of 4.1 percent in 2008.

This latest downgrade reflects in part a slowing in consumer magazines, which were hurt by a decline in luxury goods advertising in the first quarter. That's led ZenithOptimedia to cut its forecast for all ad spending on consumer magazines this year to 3.0 percent from its March forecast of 5.0 percent.

“That isn’t dreadful, but it isn’t much faster than inflation,” says Jonathan Barnard, head of publications at ZenithOptimedia in London.

These figures come as part of ZenithOptimedia’s revised global forecast. The rocky global economic situation has prompted forecasters to downgrade their expectations for Western Europe as well, to 3.7 percent from 3.9 percent.

However, that slowing is being offset by faster-than-expected growth in ad spending in developing markets. Its forecasters now expect the world ad market to grow 6.6 percent in 2008, up from the 6.5 percent they expected back in March.

Focusing on the U.S. market, the bad news for consumer magazines this year doesn’t extend to next year. ZenithOptimedia has kept its magazine ad spending forecasts at 5.5 percent for 2009 and 5.0 percent for 2010.

In fact, for consumer magazines it was really the first quarter of 2008 where the weakness was greater than expected. Concern about economic conditions was particularly strong among luxury advertisers, prompting them to pull back slightly on spending. That came on top of the already-expected reduced spending by automotive, finance and real estate advertisers.

With economic expectations now slightly better than the first quarter, the remainder of the year should be better for magazines, believes Barnard.

Aside from the magazine sector, forecasts for most other categories have not changed much for 2008. The forecast for newspapers is still for a decline of 2.9 percent. Ad spending in business magazines is still expected to grow 2.0 percent, and for TV it has been held at 3.3 percent.

The media that are doing well in the U.S., as in many other places, are the internet and outdoor, although the forecast for the internet has been downgraded slightly from 23.4 percent in March to 23.0 percent now. ZenithOptimedia expects outdoor to grow at 11.2 percent, in line with its previous forecast.

Overall, the good news in the forecast is that the downgrade for 2008 has not been extended to 2009 and 2010. Forecasts for those years have actually been pushed up a notch, to 2.6 percent and 3.6 percent, from 2.1 percent and 2.2 percent, respectively.

“We are still expecting that growth in the U.S. will be slower next year than this year, with the absence of the Olympics and the presidential spending, but the forecast isn’t as low as it was three months ago,” says Barnard.

The upgrade comes thanks to increased expectations for online advertising, particularly online video advertising, which Barnard forecasts will grow 41 percent this year and 49 percent next.