TOKYO — Sorting out cardboard boxes and grimy debris at a Tokyo outdoor market, Masao Hidaka came upon a sign that his nation was in serious trouble: Far fewer boxes than usual.

        “When there isn't even much garbage, that means our economy is in a sorry state,” says the 50-year-old fish vendor, who works part-time as a cleanup man.

        The Tokyo stock market continued its nose-dive Friday, as the benchmark Nikkei Stock Average plunged 3.31 percent to 12,261.80 points — its lowest close since July 1985, more than 15 years ago. That was worse than the 15-year-low close for the Nikkei on Thursday.

        The question on everyone's minds is whether this nation can ever recover from the collapse of the heyday-spending of the 1980s “bubble” — a time when everyone was splurging on designer-brand goods and trendy buildings were going up everywhere.

        Things couldn't be more different now.

        The government announced Friday the unemployment rate stayed at a record high 4.9 percent in January. Hiring was expected to fall in coming months because companies were weakening.

        The slowdown in the U.S. economy has also added to Japan's woes, hobbling an engine of growth it had previously counted on for driving up exports.

        The dismal data Friday, the latest in a spate of bad news, were expected to deal a further blow to the already lackluster consumption here. Spending by wage earners remained flat in January compared to a year earlier, reflecting growing anxiety.

        “I used to buy a lot of dresses during the bubble days. Now I buy what I need,” recalls Chiharu Manita, a 35-year-old trucking company worker.

        More alarming, the stock prices' downward spiral couldn't be stopped by a surprise interest-rate cut by the Bank of Japan Wednesday, signaling easier monetary policy. That was the second rate cut in three weeks.

        Another massive challenge is problem loans at Japan's major banks of nearly $545 billion. The Bank of Japan has been prodding banks to clean up the problem.

        “The outlook for the Japanese economy is severe,” said Taro Aso, minister for economic and fiscal policy. “It's just treading water.”

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