The bank has reduced its forecast for US growth for 2003 to 2.8% from 3.1%, with the outlook for global growth cut to 1.9% from 2%.
For 2004, the investment bank cut the US to 5.4% from 5.7% while global growth was cut to 4.7% from 4.9%. There have been widespread expectations that there will be a big upturn in 2004 with the US Presidential elections, the Athens Olympic Games and the European Football Championships, to be held in Portugal.
The cut follows a rise of almost 7% in US adspend after three years of decline, according to research in late August by TNS Media Intelligence/CMR.
Analyst Lauren Rich Fine, who is vice-president and managing director of corporate strategy and research at Merrill Lynch, said the cuts had been made because of weaker local ad trends in 2003.
"Local advertisers are more driven by what they can see out their own window and a need for an immediate return on investment. Because the economy's general health remains in question, local-ad reluctance is a natural result," Fine said in a note.
Her forecast follows that of ZenithOptimedia, which revised its outlook for global adspend growth upwards earlier this year to 3.2% for 2003, mainly on the back of improvements in the US market, which has been boosted by growth from automotive and entertainment firms.
The media agency had predicted growth of 2.9% in June, but revised it up in August, despite continued weakness in the UK where an increase of only 0.5% to $15.3bn (£9.17bn) is expected this year.
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