A big chunk of senior management of both Starfleet and the Federation were just lost. As well as the teaching staff at the Academy. Add to that the financial whack from the loss of billions of people as well as the infrastructure of an entire fully inhabited planet.
Maybe the morale would be worse, but if so then the Federation's morale just took a truly gigantic hit. This would be many times worse than Pearl Harbor or 9/11. While I don't think this would come anywhere near destroying the UFP, it would certainly damage it. Think what it would mean to a large nation here on Earth--the total loss of a capital city, which also happens to contain the nation's military academy (the equivalent of Annapolis or West Point) and is a major city in its own right. Not a death blow, but a severe wound. Not least to the economy.