Most of the weakness is coming from big cuts in spending and investment by businesses — down 9.7 percent in the second quarter. That belt-tightening by businesses on investment in new equipment and buildings could be a sign of a deeper slowdown ahead, according to economists at Credit Suisse.
"Extended periods of falling real business investment are strongly associated with U.S. recessions," they wrote in a note to clients. "That's why the recent three consecutive quarters of contraction are concerning."
Some of the slowdown may be tied to general uncertainty about the election cycle, which has prompted many businesses to take a wait-and-see attitude before committing dollars to new equipment or breaking ground on new buildings.
In June, a survey of business economists found that some 60 percent said that uncertainty about the November vote is damaging prospects for growth this year.
The latest data also showed that after-tax corporate profits fell at a 2.4 percent rate last quarter after rising an 8.1 percent pace in the first quarter. Weaker profits could make it harder for businesses to limit an anticipated rebound in business spending.
Businesses have also been slashing inventories, which dropped by $12.4 billion in the second quarter. The drop in inventories lopped 1.3 percent from GDP growth, the biggest drag in more than two years. It was the fifth straight quarter that inventories weighed on output.
Tight inventories could be another sign that businesses are worried about their sales prospects later this year. Some economists, though, attribute some of the drop to the second-quarter surge in consumer spending.
And consumers were clearly in a spending mood. Consumer spending jumped at a 4.4 percent annual rate, the biggest bump since the fourth quarter of 2014. That category represents some two-thirds of overall GDP.