England trail 1-0 with three to play after they failed to contain Michael Clarke (105) and George Bailey (82) as Australia piled up an above-par 315 for seven.
In reply, the hosts then lurched to 10 for two after five overs and could not get competitive despite a heartening maiden one-day international half-century from Jos Buttler (75) and fifties too for Kevin Pietersen (60) and Morgan (54).
They were eventually bowled out with more than five overs unused, Mitchell Johnson doing the early damage and Clint McKay (three for 47) mopping up later wickets.
"Today was a bad day," captain Morgan said.
"We probably let them get 40 too many.
"But the batsmen are as guilty as the bowlers - we didn't perform, we didn't put their bowlers under enough pressure by building partnerships and then looking to take them on.
"That was disappointing."
England's problems stemmed from an inability to keep Clarke and Bailey quiet, after putting Australia in.
"I don't think it was (a 300-plus pitch)," added Morgan.
"It was probably more of a 275 type of pitch.
"It was hard when you initially went in. But when you developed a partnership, you found yourself without any effort scoring at five or six an over.
"But today in the chase, we lost wickets throughout the whole innings.
"We lost early wickets, tried to rebuild and get something going - then we lost them continually throughout."
He gave due credit to Australia's fourth-wicket pair, who put on 155 in 22 overs.
"They played particularly well, and aggressively at that, put our bowlers under a lot of pressure."
The upshot was that England perhaps looked short of a third frontline seamer, especially once off-spinner James Tredwell proved untypically vulnerable.
"Regardless of the (balance of the) side, if you get after one or two bowlers, it makes it difficult," said Morgan.
"It's the case of most one-day teams, that you make up overs with a part-timer somewhere along the way. They did it with (Adam) Voges.
"We put their leg-spinner under a lot of pressure, and they had to go to their left-arm spinner.
"It happens in one-day and Twenty20 cricket all the time. Having that versatility and the option of another bowler is crucial."
Tredwell's travails were an unaccustomed problem for England.
"Obviously, it did make it difficult," Morgan said.
"He's a fantastic bowler, and has been a great performer since he's been involved. He was one of the best bowlers in the Champions Trophy.
"It was always a feeling, because they kept coming, that it also created an opportunity to take a wicket.
"It worked both ways, and we ended up getting (Aaron) Finch because they were coming so hard."
Morgan is convinced his young guns have the ability to bounce back in the third match at Edgbaston on Wednesday, as they must to stay in with a chance of winning the series.
Even if they do not, though, the progress of the new guard towards the next World Cup Down Under in 2015 is already uppermost in England's minds.
"With a particularly inexperienced and young side, the guys are learning," said Morgan.
"We are certainly looking at the bigger picture with these (young) guys.
"It's certainly not short term. The type of characters that they are, we expect them to deal with this particularly and bounce back on Wednesday when they'll have another opportunity to do well."
For Morgan's opposite number Clarke, this was an overdue victory - his first against Test-playing opposition since February.
He said: "It's an important series - and as I said before we haven't played as well as we'd like, certainly in the shorter form of the game, over in the UK for the past few years.
"Today's only the start, though. We've got three more really important games and hope we can continue to perform the way we have.
"We've just got to make sure we keep working hard and keep trying to get better - because there's no doubt England will get better from today."
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