Wolves remain 19th in the Barclays Premier League - five points behind Wigan above them - after slipping to their ninth defeat in 11 games, 2-1, at Blackpool.
The Molineux outfit have also conceded in every game and McCarthy realises he must turn around the slump to prevent a season which began with optimism, after survival last term, heading towards disaster.
McCarthy said: "It is doom and gloom at the moment - or it can be very quickly. We have to make sure that doesn't happen.
"If we do start with our heads down it is going to be difficult. We have got to keep our chins up and keep going and take what positives there are out of the performance. But it is still a defeat, so it is difficult."
Wolves were booed off by their own fans at the final whistle but their second-half display had been enterprising.
Source: PA
Source: PA