If you insist on calling it "folk music" and you expect it to continue to have the same repertoire and general approach that you favoured when you were young, then, yes....it's dying out.

If you don't insist on having it exactly meet those expectations, on the other hand, it's thriving. As for the trad stuff from the last few hundred years of folk music, I predict that it will have a resurgence at various times in the future when least expected. Meanwhile, there will be a lot of other interesting and unique music being done by young up and coming musicians who do not go the common commercial route, but find their own true expression.

I also predict that the mainstream media will ignore most of them, but I don't particulary give a damn about that.