I think you are both right and both wrong. I think the decline of the belief in a higher power that is loving in an unconditional way, an image of altruistic kindness and compassion, has possibly contributed to this decline.

However, this isn't the same thing as a decline in a belief in God. It's more of a decline in the quality of the message from religious organizations, focusing less on the loving aspects and more on the guilt/sin aspects. The whole "Fear God" movement, for example was extremely damaging in my opinion.

Believing that you have a creator that loves you deeply and unconditionally as you explore this planet is empowering and uplifting. Believing that you have a creator who is taking note of all your screw ups and moments of doubt, and tallying whether you are ultimately worthy of spending eternity in the presence of their love, that is stifling and seriously damaging. So, instead of an intrinsic relationship with God, people either stopped believing altogether, or now have an extrinsic relationship with Him/Her, a gauged and judged by clergy.