I'm thinking more precisely in the current situation of USA. I don't have the data at hand right now, but the Stock market in the USA has grown in the past decade faster than any other country in the world(probably due to QE).Many think that the stocks have been overvalued for quite some time. Yesterday, the FED shared some concerns about a possible slowing down of the economy, and yet it did not showed signs of wanting to stop increasing the rates as much as the market thought it would, i.e. it's less dovish(or more hawkish) than many thought.
I'm wondering if a country can avoid a recession, meanwhile the stock market valuations of an index representing its economy decrease. For how long, and what magnitude of drop in value can the country withstand? Only short-run? Even with great volume losses like in 1989?