Speaking at an International Advertising Association lunch in London, the WPP chief executive said that although business this year was likely to be flat, there was no "Apocalypse Now" situation that some analysts were forecasting.
The real problems were likely to emerge after 2010, he suggested.
He told his audience: "We have mortgaged the future. That's where the problems are."
He added: "We have spent more than have saved and we will pay the penalty. It's terrible for us, our kids and our grandkids."
Sorrell, just back from Washington where he watched the presidential inauguration, predicted that Barak Obama's arrival in the White House would unlash a new wave of black talent not only in the US but across the world.
At the same time, he said that the impact of new media would be profound. "Old media will never be the same again or as profitable again," he declared.
And he expected that consumer insight, which now accounted for $4 billion of WPP's $15 billion revenue, would grow in importance for agency groups.
"Clients value agencies because of their fundamental consumer insight," he said.
"Clients won't move unless they get a qualitative justification for what they do. We may not like it, but that's the way the world is going."
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