Ok good, i was going to suggest that first, I also had to use a pulldown resistor to make your sketch work as expected when power is not present on pin 2. Yes, the USB gets disconnected when sleeping so you have to reopen the Serial monitor and even then it could take awhile for the usb to stabilize. What I found works best is to use usb for debug and use a delay of 1000 ms after sleeping to let the usb reconnect with your pc and it still can be a little flakey.
OK great, and yes my external circuit has a pulldown on pin 2. Sorry should have mentioned that.
So far I have tried to reopen the serial monitor and used different delays after waking on the USB but I have not had any luck yet. I am using a Teraterm terminal for my Serial monitor window. When you say serial monitor are you referring to the Arduino IDE serial monitor? I have not tried that one but will give that a shot to see if that is more forgiving on the reconnect. I am only using the usb for debug and I may have some other options for that.
Thank you for all the help.