The national movements were the thing of the late 18 century. They haven't thought about themselves as nations all that much before, they were kingdoms. The unequal standing got bigger and language oppression and such got bigger in that late period.
Austria-Hungary in 1914 was a peaceful, growing and sort-of prosperous nation. The nationalist squabbling was incessant, but did not prevent a fairly fast growth of living standards and businesses of the old empire were tighly interconnected all over the map.
The war proved too destructive to handle, though. Even the most prominent nations of the empire (Germans, Hungarians) lost interest in anything but feeding their hungry families at the end of it.
Austria-Hungary limped along because the varying ethnic minorities were used to the regime and were more worried about who came after the Austrians. But the whole enterprise was running on borrowed time as nationalism was going to dismember the empire at some point.
With the exception of Bosnia, A-H territories haven't seen any fighting or civil war between 1866 and 1914. People utterly forgot what war even meant.
As for prosperity, there were huge differences between individual regions and Cisleithania (Austrian lands) was quite a lot more industrial than Hungarian lands, but the living standards were improving fast, as was literacy, healthcare, public infrastructure etc.
It is not entirely clear what would have happened without war. Nationalisms were strong, but so were innumerable ties holding the country together. For example, Spain is still a country, even though its regional nationalisms are very strong.
For nationalist movements to succeed, they need to convince a lot of individuals that they will be better out than in, which, for any of the smaller nations of the empire, was questionable. Even Hungarians would think twice about secession, given that their part of the monarchy was mostly rural and needed industrial output of the other part.
The Grossdeutschland movement, seeking to unite all German speaking peoples under Berlin, had more of a chance to succeed, because in their case, it would not mean independence but rather transfer of sovereignty to an already powerful nation (imperial Germany). A-H authorities generally considered pan-German nationalists to be the most structurally dangerous element.