Equities are only one sector. As a very simplistic model, imagine that companies were growing at the same time that property was getting less valuable, then we might see flat GDP but a growth in stocks and a fall in real-estate values. (Of course some real-estate holders are equity-funded, but many aren't; since returns are predictable and consistent, real-estate tends to be mostly funded by debt, whereas equity funding is more appropriate for more volatile things like research- or consumption-driven companies). The stock market correlates decently with "the economy" generally, but it's not the whole thing, and many would consider a portfolio that included both stocks and bonds, and perhaps property or other assets as well, to be more reflective of the overall economy.

Probably hidden inflation... There is only so much stuff someone needs to buy before starting to sink the rest into index funds/stocks/speculative things.