It's undeniable that the market is changing, budgets are shrinking, etc. This will continue, but I don't think the market will disappear, only it will continue to morph into something new and different. Some of us have been blessed to be in a position of being very busy due to a combination of our track records and where we are in the food chain. I have no doubt things look poor for you but don't know if it's a location thing or more of an individual issue. In other words, I'm not aware of anyone else in your area, but there may be one or two who are doing extremely well because their business is built to be agile, moving this way or that as the market inevitably sways.
As an example, Euphonic was built by paying cash - the studio carries zero debt (I know guys that carry upwards of $10k/month debt loads for their studios alone). At the same time, Euphonic isn't really a 'local' company, rather more than 90% of our work comes from outside of this area. I've spent years networking with folks from all over the world, helping out whenever possible, showing people what I could do for them. This created a much larger client base than relying on local word of mouth.
Now I could go on all day about business decisions I made five or more years ago that have come to fruition and benefited me, but the above examples are probably enough to show you how our biz was set up - it's taken many years, but we've built something that should be able to help us enjoy life for many years. These are things we thought about and were proactive about, not things we just stumbled upon. I think you ought to spend some time thinking about all the aspects of your business, all the things that affect the way you do business, but focusing on the things you have control over. Then you can see where you are missing.
For example:
Are you focusing on your local market only? IIRC, you recently reverted back to your original focus of working on acoustic music - is there enough acoustic music happening in your market to support you and others as well (you'll never have 100% of the market)?
This business is extremely gratifying and can be quite lucrative if you hit your stride, but it's not about luck (or even location, imo - we're not exactly in a production mecca here) - it's about structuring your business and targeting the right people.
Hope you don't find this condescending - it's not like I have all the answers - I'm just trying to help you figure out how to make your business grow where you can enjoy it more.