It took a year for economists to call the recession. Yet Madison Avenue felt the pinch earlier than most industries.

Despite an ad-rich presidential election and the Olympics, U.S. ad spending this year is expected to decline 3.8% to $172.5 billion, according to Publicis Groupe SA, as sharp pullbacks in the second half by auto makers and others put an end to routine annual gains.

General Motors Corp., for instance, has asked its agencies to slash fees by as much as 20% this year and next.

An industry-wide ad spending decline of another 6.2%, to $161.8 billion, is forecast for 2009.

In response, big agencies such as Omnicom Group are resorting to layoffs. Omnicom this year cut loose almost 5% of its 70,000 employees, and more pink slips are expected at other agencies early in 2009.