Federer, with an extra days rest following Rafael Nadal’s semi-final withdrawal, surrendered a one-set lead to lose to Thiem.
The Swiss star was hunting the 101st title of his career but was unable to beat a resilient opponent.
Thiem will rise above Federer up to No 4 in the world rankings with his latest success.
But 20-time Grand Slam winner Federer was able to pick the positives from a tough week in California.
“Maybe that’s why I’m ok with it today, because I feel like I’m actually playing good tennis,” Federer said.
“Like in Australia I wasn’t too down on myself because I feel my mind is there and my body is there.
“When you feel that way you take it more positively.
“It is just not as dramatic as when you’re hurt and things are difficult. Maybe those hurt more.
“I am happy for Dominic winning his first Masters 100, it is a massive event to win.
“I got my 100 Roger Federer: Why I’m okay with Dominic Thiem loss at Indian Wells in Dubai and had a good week here.
“There is nothing to look down, things are good for me, I just needed a better shot from time to time.”
Federer will jet off to the Miami Open today as he attempts to win the second leg of the ‘Sunshine Double’.
“The body is perfectly fine and it make me feel upbeat,” he added.
“I have been playing every single day for the last three weeks.
“I can be very happy for that.
“The plan is to definitely play Miami for now.”