Here are a couple of paragraphs from Unexpected Returns that highlight the importance of being careful not to confuse the economy with the stock market.
Economic Growth and Stock Market Returns
The lack of correlation between economic growth and stock market returns for extended periods of time surprises most investors. Real growth in the economy and in earnings per share (EPS) averaged virtually the same rate from the mid-1960s to the early 1980s as from the early 1980s through 1999. While real economic growth was remarkably consistent over the two secular cycles, stock market returns differed dramatically.
Despite substantial growth in both the economy and earnings from 1965-1981, the market ended at the same level at which it had begun sixteen years earlier. By contrast, 1982-1999, a period of lower nominal economic and EPS growth, saw the market soar more than tenfold to produce one of the greatest bull markets in history. An investment of $100,000 in the S&P 500 in 1982 was worth well over $1 million by the end of 1999.