The death knell for the industry is the redefinition of the unit of American society.

The unit at the time of DaBeers smashing 1947 "Diamonds are Forever" campaign, in 1947, was the -family-. It wasn't too long after women's suffrage, and still women were expected to be barefoot and pregnant, after all, birth control wouldn't come for another 20 years. Families were the operative entity messaging targeted, and the campaign was successful because the diamond was a sort of foundation for the foundation of the family, the marriage, not dissimilar in spirit from long held human societal norms of dowries and such.

The sexual and hippie revolution of the 1960s shook the whole thing up. Women didn't need families, there was birth control, women could work, a revolution carrying forth to the 1980s shark killer business woman to today where in fact many universities have become female majority. The modern unit of american society is the individual, not the unit, making the diamond an anachronistic echo of a once proud culture, now seen as a bit dated, a bit weird, a bit unsettling and paternalistic, instilling the same feelings in a person that an old Playboy magazine might.

No, the industry grew over that period as diamonds were increasingly purchased for more than wedding rings and stones on rings became larger and more ornate. Over this period, a wider variety of retailers began to sell jewelry, increasing accessibility and price variance. The social trend you identified, in correlation with others, increased available discretionary income which was good for the fashion industries.