By John S. McClenahen May's figures for personal income and personal consumption expenditures, released on June 27 by the U.S. Commerce Department, are mildly encouraging. Personal income increased 0.3% last month, right in line with most economists' expectations, while personal outlays rose 0.1%, below the 0.2% economists generally expected. May's mark for personal income matched February's and March's 0.3% gains and topped April's 0.2%. May's rise in personal consumption expenditures (PCE) matched April's 0.1% gain but was dramatically less than March's 0.8% figure. The so-called core personal consumption expenditure deflator, said to be Federal Reserve Board Chairman Alan Greenspan's favored measure of inflation, was unchanged between April and May. The core PCE deflator is running at an unusually low annual rate of under 1%, figures Maury Harris, chief U.S. economist at UBS Investment Research, New York. And to Harris that suggests that the lingering threat of deflation will keep alive the possibility of another Fed cut in short-term U.S. interest rates. Last week, the Federal Open Market Committee lowered the influential federal funds target rate to 1% from 1.25%.