Can't say much about the guitar market here in the US apart from I bought a Yamaha accoustic the first couple of months I got over here.. Never paid much attention to the name of the shop, turns out it was Guitar Centre (sorry English spelling) on Erie Boulevard here in Syracuse. It was on sale and a great bargain, I know back in England I would have paid 3 times as much for the same instrument.
I think part of the demise as it's being called of the guitar is the price being charged for them, especially in Europe. My daughter has 2 PRS electric guitars that in England probably cost 4 times they sell for here.
I also think a major problem is the lack of live music or venues to play. My step son is big into electronic/computer generated music. Yeah a really great concert going to see someone standing over a computer keyboard. (That's sarcasm for those who don't recognise it. It's easier carting a guitar to a venue than an electronic keyboard.
Do they still "teach" music in schools anymore, Even music appreciation? I am as avid a fan of Mozart as I am of Fairport Convention and 5 Finger Death Punch because I was taught how to appreciate music rather than just blindly follow whatever music trend my peers were listening to.