In the first of three estimates for U.S. economic growth in the second quarter, the Commerce Department reported that real Gross Domestic Product slowed to an annualized rate of 2.4 percent, down from an upwardly revised rate of 3.7 percent in the first quarter, primarily due to a widening trade deficit and declining consumer spending.

This “advance” look at the April-to-June period will be followed by the “preliminary” estimate at the end of next month and then the “final” GDP figures will be released in September. Since there are often large revisions between the first and second data releases, some amount of judgment should be reserved until the preliminary release next month, however, rumors of a major slowdown in growth appear to be well founded.

What is a bit misleading about this particular data release is that, while it covers the months of April, May, and June, April was a much stronger month than either of the months that followed, but, for the purpose of this report, only the end-of-quarter result is provided.

For example, while retail sales rose 0.3 percent in April, they then fell 1.1 percent in May and 0.5 percent in June, the latter two months playing a big role in the consumer spending component of GDP rising by just 1.6 percent in the second quarter following an increase of 1.9 percent in the first quarter.

As shown below, personal consumption contributed just 1.2 percentage points to the overall Q2 growth rate, down from two of the three prior quarters and only about half the level seen in the years prior to “The Great Recession”.

The trade deficit expanded in the second quarter, up from $338 billion to $426 billion, and this contributed -2.8 percentage points to the total, meaning that, absent the trade imbalance, growth would have been much higher.

The largest contribution to growth was the business investment category that was responsible for 3.1 percentage points, more than offsetting the decline from the trade gap. Government spending accounted for 0.9 percentage points of the overall 2.4 percent rate.