Liverpool manager Roy Hodgson admits his side are in a "predicament" after they slipped to second bottom in the Barclays Premier League following defeat in the Merseyside derby.
However, the 63-year-old refused to accept that the situation was worsening and believes his players are showing signs of improvement. Tim Cahill, in the 34th minute, and Mikel Arteta, in the 49th, scored the goals which ended a run of three successive league derby defeats for the Toffees.
"We are not trying to disguise the fact this is a predicament, or any other word you care to use," said Hodgson. "For any team to take six points from eight games at the start of a season is a predicament but maybe you could argue being Liverpool the predicament is greater. We didn't win the game and therefore people will read a lot of things into the performance. The result was bad but I refuse to accept it was a bad team performance."
He added: "I can't have any qualms in terms of the performance they gave. I can only hope people see it the same way. It was such a good game of football but everything revolves around the fact that Liverpool didn't win it."
Hodgson accepted striker Fernando Torres, who has scored just once this season, is struggling for confidence but felt it was wrong to suggest it was a problem which was affecting the rest of the team.
"I didn't see a lack of confidence out there," he said. "My opinion was that the way we played the game was as good as we have played this season.
"I thought we caused them plenty of problems but you are never going to get clear-cut goal chances when a team is defending a two-goal lead. Fernando of course is going through a bad time, he needs a goal and his confidence is low. But I wouldn't have said it was a question of too many lacking confidence - but people are playing under pressure."
Everton manager David Moyes was delighted to put an end to his derby misery.
"We probably played better in every other game this season bar Newcastle (a 1-0 home defeat)," he said.
"I didn't think our football was as good but there was a reason for it; the game was much more tense and the derby brings things tighter. I said to the players afterwards we had played much better and lost."
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