As psychiatry became more biomedically oriented, all those students who were interested in psychiatry because they didn't like medicine, or were interested in social justice, activism, humanities and social sciences etc, abandoned psychiatry from primary care. actually it was
the 1990s when recruitment into psychiatry was at its lowest with about 3% of students choosing psychiatry, and there was a significant reduction in the number of residency positions in psychiatry in the 1990s which despite the large increase in positions in recent years hs never returned to what it was at the beginning of 1990s (because there aren't enough people interested to fill the spots).
In terms of prevalence of psychiatric disorders - up until recently it appears that the incidence of psychosis has been overall stable or declining over time. There does seem to be an uptick in recent years in european studies over the past 10 years or so however. As for depression: the ECA did not find any evidence to support mental disorders like depression increasing over time. Though the age of onset is now in the 2nd and 3rd decades of life rather than in the 4th and 5th. the NCS-R did find an increase in prevalence of depression, but a slight decrease in the incidence of MDD. This suggests that depression has become more chronic, though fewer people are becoming depressed. I (and others) have argued that this is because of the widespread use of antidepressants which may be increasing the chronicity of depression or making people psychologically dependent on drugs that they are told are like "insulin for diabetes".
There does not seem to be any evidence that the most severe mental disorders - psychotic bipolar I disorder, or schizophrenia are more prevalent. In fact as the concept of bipolarity has vastly expanded, manic-depressive psychosis strictly defined still has a prevalence of 0.5%. A
recent study has even suggested that the incidence of dementia is declining (which would make sense).
In some there is no evidence that problems that psychiatrists can actually be useful for are increasing, though there may be an increase in problems that psychiatrists have no hope in hell of treating (**** life syndrome, social inequality, racism, poverty, marginalization, alienation) though even this is doubtful.