...drop in the year-earlier period when the fallout from the financial crisis left Americans shell-shocked. Echoing the sentiments of so many reporting to this quarter’s survey, a dealer from Chicago remarked, “The consumer is still struggling in a weak environment. We see it getting better, but it’s painfully slow.”

There were a few bright spots in the latest quarterly results. Beleaguered fretted instrument sales swung from a 13% decline in the third quarter to a 3% gain in the fourth quarter. Vertical piano sales ended a three-year run of quarterly declines with a 2.0% jump in the quarter. School music product sales also experienced a substantial swing, reversing a 6.6% decline in the third quarter with a 2.7% increase for the latest three-month period. In total, seven of fifteen product categories tracked in this column posted gains for the quarter, a stark contrast to the previous four quarters where sales dropped for every product group.

Holiday sales were stronger than in the prior year as consumers gradually returned to buying, and overall spending appears to be growing slowly. However, dealers across the nation are unanimous in reporting that customer buying habits have changed noticeably in the last year. Guitar players have clearly put the brakes on buying high-end guitars, a category that dealers once broke out at sales of $1,500 and higher. “This is where we have seen the most noticeable change,” said a dealer from New York City. “High-end in my stores is now anything over $1,000. Mid-priced has moved from $699 to $499, and entry-level has remained unchanged. It’s not too far removed from what’s going on with flat-screen televisions: [people want] more for less.” Pro Audio buyers are also turning to value brands according to a dealer in Spokane who sent in his quarterly data with the following footnote: “We’ve stocked Behringer products for a long time and always had the toughest time selling them. That seems to have changed in the last nine months; for example, in power amps they’re now outselling QSC.”

For the piano dealer, that change means a move toward more vertical pianos and fewer specialty finish pianos. “The piano players are still buying, but the buyer that a few years ago would have purchased a grand is now buying a vertical,” remarked a dealer from Miami. “The decorator that needed the cherry finish for a big new house is all but gone.” Nationwide data supports this anecdote, as vertical pianos, which once sold in similar quantities as grands will now eclipse them by approximately 65% in 2010.

Recessions are not new; in fact, since the close of World War II, the U.S has experienced 11. What makes this latest recession unique, aside from the fact that it extended a record 20 months is that unemployment surged from 4.4% at its start to a just-reported 10.6%. That 6.2% net change is more than double the average change of the previous ten recessions. Compound unemployment with flagging credit and housing markets and it is no wonder that discretionary consumer products like those sold at music stores have been impacted.