The decline of usability, recognizability and coherence in desktop user interfaces. I honestly think we reached peak UX some time in the mid-90s. With the advent of touch devices, paradigms are mixing in a way that's directly hostile to productivity.
I agree with your take that mid-90's was probably peak UX. But I think that has more to do with that being about the time when companies stopped trying to strike a balance between accommodating both power users and casual users. Since then, much more effort has been put into providing a polished/slick UI at the expense of things like automation. Of course, that also plays into the advertising model which I believe is diametrically opposed to things like automation. (i.e. if you're not clicking/touching, they can't tell if you're looking at the ads)
Touch capabilities can be a nice addition to many types of desktop productivity software without detracting from what's already there. Companies reworking desktop applications to look and feel like mobile apps (with all of the related pros and cons) is what causes productivity to suffer rather than anything inherent in the paradigm.
> working desktop applications to look and feel like mobile apps
This is basically what I mean by mixing paradigms, and it's getting more and more common in operating systems as well, with Windows as clear leader.
As for touch input, I personally think it's of little use on the desktop. I've already got a mouse, which when properly configured is a pixel-precision input device. I simply cannot do the things I do with a mouse on a touchpad, let alone a touchscreen.
There are several other crimes as well, big and small, mainly in Windows but also on Linux/BSD (especially in Gnome, where the worst decisions made seem to perpetuate into other FOSS DE:s). Apple is still keeping things relatively sane, even though they've slipped somewhat of late.
It's pretty shocking that we are where we are in 2020. That year sounds like the future to me, but in computer interface terms it's definitely dystopia. The market failure to cap all market failures!