The decline was more than the 0.1 percent drop economists expected while personal income grew less than a 0.4 percent forecast.
Disposable personal income (DPI) rose $52.6 billion or 0.4 percent.
In December, personal income increased $45.3 billion, or 0.3 percent, DPI increased $37.3 billion, or 0.3 percent, and PCE decreased $35.7 billion, or 0.3 percent, based on revised estimates.
Real DPI increased 0.9 percent in January, compared with an increase of 0.5 percent in December. Real PCE increased 0.3 percent, in contrast to a decrease of 0.1 percent. The price index for PCE decreased 0.5 percent, compared with a decrease of 0.2 percent.
Wages and salaries increased $42.4 billion in January, compared with an increase of $8.6 billion in December. Private wages and salaries increased $39.7 billion, compared with an increase of $7.2 billion. Government wages and salaries increased $2.5 billion, compared with an increase of $1.5 billion. Pay raises for federal civilian and military personnel added $2.2 billion to government payrolls in January.