WASHINGTON (AFX) - The US economy slowed sharply in the second quarter to a 1.1 pct annual rate from a revised 5.0 pct rate in the first quarter, the Commerce Department said. The advance forecast of Q2 GDP growth was below expectations of Wall Street economists who had expected the economy to expand at a 2.3 pct rate. The slowdown was led by the trade sector and consumer spending. The Commerce Department also released annual revisions to GDP data going back to 1999. The revisions show that the recession started sooner, was deeper and lasted longer than previously believed. Inventories contributed to most of the growth in the first quarter. Businesses increased inventories by 1.0 bln usd in the second quarter, compared with a 28.9 bln decline in the first quarter and a 98.4 bln drop in the fourth quarter. This is the first increase since Q4 2000. The real change in business inventories added 1.2 percentage points to Q2 GDP growth, after adding 2.6 percentage points during the first quarter. Final sales -- GDP growth minus inventory behavior -- declined at a 0.1 pct rate in the second quarter, down from a revised 2.4 pct rise in the first quarter. This is the first negative quarter of final since since Q3 2001. The GDP chain weighted price index rose 1.2 pct, down slightly from a revised 1.3 pct rise in the first quarter. Excluding food and energy prices, the GDP chain-weighted index rose 1.4 pct, down from the a 1.6 pct increase in the first quarter. The consumption price index rose 2.5 pct in the second quarter, compared with a 1.1 pct rise in the first quarter. This is the highest rise in the consumption price index since Q1 2001. Excluding volatile food and energy prices, the consumption price index was up 1.7 pct, compared with a 1.4 pct gain in the first quarter. Consumer spending slowed in the second quarter - rising 1.9 pct, after a 3.1 pct rise in the previous quarter. This is the smallest quarterly gain in consumer spending since Q3 2001. The spending slowdown was caused by a decline in nondurable spending, which fell sharply to a 0.6 pct decline from a 7.9 pct rise in the first quarter. Somewhat offsetting the decline, spending on durable goods rose 2.4 pct, following a 6.3 pct decline in the first quarter. Services spending rose 3.0 pct in the second quarter, following a 2.9 pct rise in the first quarter. Nonresidential, or business, fixed investment fell 1.6 pct in the second quarter after falling 5.8 pct in the first quarter. Business spending has declined for seven consecutive quarters. Residential fixed investment rose 5.0 pct in the second quarter, down from a 14.2 pct rise in the first quarter. Equipment and software spending rose 2.9 pct in the second quarter after falling 2.7 pct in the previous quarter. This is the first rise since Q3 2000. Total government spending slowed in the second quarter, rising 1.8 pct after a 5.6 pct increase in the first quarter. Spending by state governments fell 1.1 pct in the second quarter after rising 4.6 pct in the first quarter. Trade subtracted 1.77 percentage points from Q2 GDP growth, after subtracting 0.75 percentage points from Q1 GDP growth. Exports rose 11.7 pct, compared with a 3.5 pct rise in the first quarter. Imports rose 23.5 pct, compared with a 8.5 pct rise in the first quarter. Today's report makes assumptions about June economic data that has not yet been released. The report assumes the trade deficit will narrow slightly in June and that inventories of nondurable manufacturing goods will increase. The government will revise the GDP data twice before it becomes final. The first revision will be released on Aug 29, and the final revision will be released Sept 27.