Importance of loading states

It seems obvious that we need to keep the system status visible and responsive to our actions, yet we still see a lot of examples, when after retrying the system status is unknown.

I've typed a password and I've got that red message on top of the screen informing me that the password I typed is wrong. I typed the password again, assuming that this time it's correct. But after hitting the login button, I see no change.

It makes me think — did the form submit the new password or not? Or is this password also wrong? Eventually, after a few attempts, I figured out it was wrong password. But the experience was frustrating.