In short, Loot is 'so bad' now because TFP have finally taken the first serious step in balancing the loot for the final product. What you're looking at and experiencing now will be expanded upon.
- Additional low tier items will be added to flesh out the early game loot pool, such as pipe pistols and rifles.
- Biomes will have a difficulty curve with the Forest being the easiest, and the Wasteland being the hardest; Loot will share a similar curve in that looting in the wasteland, while more dangerous, will also be more lucrative- Perfect for more skilled and knowledgeable players to 'skip the stone age' as it were, if they so choose.
- Similarly to the above, POI's themselves will be getting a bit of an overhaul. Higher tier POI's will become much more difficult to fight through, but will also become more lucrative to go through- Meaning for the stubborn or the skilled, they can acquire better equipment sooner.
- The two systems above will work in tandem- Looting a T5 Shamway Factory in the wasteland will give you waaaaay better loot.
And possibly some other things I'm not thinking of off the top of my head.
Overall, prior to the current changes, You could be in end game equipment by the end of week 1-2. I mean that literally- You could have T4-6 equipment of pretty much everything. But that left you with nowhere to go from week 2 onward, in a game intended to have the story play out till day 50~, and in which it is a sandbox that is meant to extend from day 50 to however many you want to keep playing for.
Being essentially done with looting by day 14 out of 50+ is extremely imbalanced. So, it's being rebalanced. It wasn't addressed for a very long time because there were other more important things to work on, and the system functioned as is, even if it was imbalanced.
But, at the same time, This rebalance means that for everyone who had been playing along with the development, it suddenly feels like your legs were shot out under you and you can't find anything "good"; which is why the changes will be expanded upon in the near future.