the fact the Federation was not picking up steam at all (and felt much more in decline), to me indicates that the writers intended for us to interpret this as the Federation in its death throws until the Discovery showed up.
I agree with the basic fact - the Federation was struggling to maintain what it had in the face of the Emerald Chain and others, and it took Discovery's arrival with unique technology to give it an edge.
But I think they framed it as a story of resilience and determination, mainly through Vance and Sahil.
There's definitely nothing in STO, despite the dev teams absolutely loving deep cuts.