The nation's sluggish economic recovery has resulted in low consumer confidence and reduced spending, with the cosmetics market affected by reduced year-on-year value gains each year since 1999, said the report.
However, there does appear to be light at the end of the tunnel, with the market researcher identifying key trends and product segments that look set to boost industry sales. These include products targeted at younger generations and ethnic populations.
"Consumption by teenagers in the US cosmetics and toiletries market is estimated to amount up to 20 percent of total value sales, thus making teenagers a very important consumer market," said the report.
The nation's teenage population, which currently numbers almost 33 million, continues to set many of the fashion and make up trends in today's fast changing pop culture, according to Euromonitor.
As well as having access to an unprecedented amount of disposable income, which means good spending today, teenagers are also being increasingly targeted by manufacturers in the hope that they will gain loyal consumers for the future.
"Teenage consumers are at a critical point in developing brand preferences that may endure to affect the market for decades," said the report.
According to Euromonitor, what draws the younger age groups in cosmetics products is "fun, convenience and basic quality," although, being "highly attuned" to the mass media, teenagers are quick to adapt to emerging styles.
Male teenagers are also emerging as a target group of the population, with today's young boys being more interested than ever in looking and smelling better. In contrast to the past, boys today are less likely to feel products are 'unmanly,' as they are specifically marketed for them.
'Ethnic' hair care, skin care and colour cosmetics, which in the US are almost entirely products designed for African-Americans, are also set to enjoy considerable growth. "Major cosmetics and toiletries manufacturers are watching these categories closely because they consider them major potential areas for growth," said the report.
Although African-Americans only constitute around 12 percent of the nation's population, they spend twice as much money on hair care products and substantially more on skin care than the average American.
"Demand for ethnic colour cosmetics is mainly due to women's wish for a foundation that matches their skin tone more exactly, and other issues related to skin type."
"African-American women find it difficult to purchase foundation because of the wide variation in their skin color. As a group, African-American women need more than six medium and dark shades in a cosmetics line to match their skin perfectly."
Skin moisturizing is also important for this group of the population as their skin type is much more susceptible to changes in weather conditions. In winter, dry skin becomes a problem, whereas summer weather results in oily, acne-prone skin.
In recent years, cosmetics giant L'Oreal has invested heavily in African-American products, with the purchase of Soft Sheen in 19998 and Carson Products in 2000. According to Euromonitor., the product lines offered by these companies account for approximately 20 percent of the "very fragmented" hair care sector designed for African-Americans.
In 2003 the company also opened a multi-million dollar research and development laboratory in Chicago, called the L'Oreal Institute for Ethnic Hair and Skin Research, which claims to be the first lab focusing specifically on the beauty needs of people of color.