We've had very low inflation in the last 20 years or so. While certain numbers, especially short-term ones, are reported in nominal dollars instead of real ones (it's actually kind of hard to report on real dollars except in considerably retrospect), neither Yglesias nor anyone else in the broadest definition of economic literature is confused about the nominal/real distinction.
That said, productivity is not declining. The first derivative of productivity is declining -- that is, productivity is going up, but it's not going up as fast as it used to. Also, the population is going up. And that explains the (real, not nominal) stock market growth.