We are not really in a lot of trouble, unless you define that as "not competing for the title this season" or something like that.
I remember when people were arguing that City were coming to the "end of a cycle" with aging players like Kompany, Zabaleta, Demichelis, Fernandinho, Silva, Aguero and what else. They've basically always stayed competitive bar Liverpool's title season and have now all successfully replaced those aging players with players young enough to be competitive for the foreseeable future. Of course they can splash more cash so it doesn't matter to them if some of their transfers are misses.
I think it's entirely reasonable to argue that we also have reached the end of our "cycle", but there are signs that we are looking at the long term, e.g. signing Fabio Carvalho who's nowhere near the finished product, giving Harvey Elliott (still only 19 years old) game time, and signing a raw player with Nunez. If they get more comfortable and develop properly, we could have a new quality core to compete for a few years. That's of course not without risk because other players will have aged even further by the time they would potentially be good enough to be deciding players for a title-winning squad.
If you don't look at the big picture but let's say yesterday's game, it's easy to see where our struggles this season will come from: Elliott (not yet) and Henderson, Milner and Firmino (not anymore) are barely material for a top-4 contender, let alone a title contender imo. We miss direct play from midfield, we miss someone creating opportunities in dangerous areas of the pitch for Diaz and Salah, we miss a proper DM, we miss a striker running in behind when we have to play with those guys. Couple that with the fact that VVD (and by extension our entire defense) has started the season poorly, we were bound to have a poor start to the season, although I think no one predicted it would be this bad.
Either we continue to struggle for a little while and the title will firmly be out of sight in a couple of weeks, or we turn things around right now and we'll be somewhere in the top 4 by the end of September. Five of our next six games are winnable ones and four of them are at home, of course no game is easy if you're struggling but we'll see how it goes. But anyone suggesting we are suddenly in major trouble after losing our first PL game of the calendar year is just a tad reactionary.