In its report on personal income and spending for July, the U.S. Bureau of Economic Analysis data show that personal income in current dollars grew by 0.2% month-over-month, and personal spending (called “personal consumption expenditures” or PCE) fell by 0.1%. Real disposable personal income rose 0.3% in June and real PCE rose 0.2%. “Real” figures are given in chained 2009 dollars.

Consensus estimates had called for month-over-month growth of 0.3% in personal income and 0.2% in spending.

Monthly growth in wages and salaries rose $12.9 billion in July, compared with growth of $25.6 billion in June. The largest decrease came in goods-producing industries, where July’s growth of $700 million was far below June’s growth of $8.8 billion.

Personal outlays dropped from $51.2 billion in June to $12.0 billion in July as consumers spent nearly $37 billion less on personal consumption expenditures.

Personal saving rose month-over-month in July, from $709.4 billion in June to $739.1 billion, a savings rate of 5.7% compared with 5.4% in the prior month.

The price index for PCE rose 0.1% in July, equal to the consensus estimate, up 1.6% compared with July 2013. The core PCE price index, which excludes food and energy, also increased 0.1% month-over-month and is up 1.5% year-over-year. Both increases are in-line with consensus estimates.

Following robust GDP growth in the second quarter, the third quarter is off to a rough start. Unless these numbers are revised sharply in the weeks ahead, there is little chance that U.S. third-quarter GDP will match the second-quarter showing. The low PCE index increases could be signaling a coming bout of deflation.

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