It’s August, and that means pretty much all of Wall Street is on vacation right now. The Fed has locked its doors and said, “See you in September.” And politicos are island hopping: VP Kamala Harris made a fundraising appearance on the Vineyard this week alongside the Obamas. Turns out inflation may be taking a summer break, too. The Survey of Consumer Expectations on Monday showed that expectations of higher prices are easing. Respondents to the Federal Reserve Bank of New York survey in July expect inflation to grow at a 6.2% pace over the next year before falling to 3.2% for the next three years. Those numbers are definitely high, but they’re a drop from the 6.8% and 3.6% predicted in the June survey. Expectations for food and gas prices, which the Federal Reserve’s interest-rate hikes have little control over, also fell. Consumer psychology impacts the economy and we can talk ourselves into lower inflation. If consumers believe price pressures are easing, they may rein in their spending and that can become a self-fulfilling prophecy. Another factor that could help the inflation crisis: Gas prices rose by a whopping 60% over the past year, but have been steadily declining over the past few weeks. The price per gallon has gone down by about 67 cents in the last month, but overall it’s still 87 cents higher than it was last year. It remains to be seen how these changes will affect the Consumer Price Index, a key inflation gauge, on Wednesday. CPI climbed 1.0% in May and 1.3% in June, which pushed the year-over-year inflation rate to 9%. That’s the hottest pace since November 1981. But recent declines in gas and food prices could cut inflation significantly. The monthly rate could go as low as 0.2% in July and turn negative in August, according to David Kelly, chief global strategist at JPMorgan Funds. “Overall, with demand slowing and supply picking up, we expect to see steady downward pressure on inflation for the rest of this year and in 2023 even if the Federal Reserve pursues a slightly less hawkish path,” he wrote in a note Monday. And if that’s not enough inflation news for you, on Thursday we’ll see the latest data from the Producer Price Index, which is the Federal Reserve’s favorite way to measure inflation. Like CPI, PPI has surged over the past few months but analysts generally expect price increases to slow. Not everyone agrees, though. “Markets currently appear to expect that a mild [economic] contraction will result in falling rates and lower inflation,” wrote analysts from the BlackRock Investment Institute in a note Monday. “We don’t think such a ‘soft landing’ is likely in a volatile macro regime shaped by production constraints. Central banks will have to plunge the economy into a deep recession if they really want to squash today’s inflation — or live with more inflation. We think they’ll ultimately do the latter — but they are not ready to pivot yet.” Fed Governor Michelle Bowman said last weekend that she doesn’t think inflation will come down soon and that interest rates should keep increasing. San Francisco Fed President Mary Daly said something similar, warning that rate increases were far from over. And what about all of the commotion in D.C.? Senate Democrats worked overtime this week to pass a sweeping economic package that they’re calling the Inflation Reduction Act. The hulking 755-page bill includes $430 billion to combat climate change, increase health care coverage, and boost taxes on corporations while reducing the deficit. It’s a good plan for Democrats who face midterm elections in three months, but won’t actually do much to ease inflation in the short-term; none of the bill’s provisions will go into effect until 2023. Bad news for Buffett? Think again. Warren Buffet’s company lost $44 billion dollars last quarter. That sounds like a lot of money to me, but hey, what do I know? It’s really no big deal, reports my CNN Business colleague Paul R. La Monica. In fact, things are looking up for The Oracle of Omaha’s Berkshire Hathaway. The conglomerate posted a net loss of nearly $44 billion in the second quarter, mostly due to big drops in its stock portfolio: Berkshire owns huge amounts of Apple, Bank of America, Coca-Cola, Chevron and American Express. But Berkshire’s operations are actually very strong. The firm reported an operating profit of $9.3 billion in the quarter, up nearly 40% from a year ago. Berkshire’s businesses have bounced back from the Covid-induced slowdown in 2020. Plus, Buffett is known for thinking of market downturns as prime buying opportunities. Berkshire has been aggressive this quarter, purchasing a large stake in oil giant Occidental Petroleum and announcing an $11.6 billion deal for insurer Alleghany earlier this year. Retirement, here I come Covid-19 changed the way we measure time. There are real years, and then there are those pandemic years which either flew by at superspeed or dragged on forever, depending on who you ask. Thankfully, the job losses, economic downturn and change in the passage of time experienced during the first year of the pandemic haven’t changed elderly Americans’ retirement expectations. About 60% of the 20,000 respondents in the University of Michigan’s 2020 Health and Retirement Study reported that their work was affected by the pandemic, 55% said they had to stop work entirely and 15% lost their job permanently. But financial situations remained remarkably stable. About three-quarters of the participants said that their finances were the same, and 60% said their household spending didn’t change in 2020. “The results of this study imply that elderly American adults’ retirement expectations remain uninterrupted despite enduring through the Covid-19 impact on their work and financial situations in 2020,” wrote analysts at the Employee Benefit Research Institute. See you on the shuffleboard court. Up next Earnings from Dine Brands, Hyatt, Spirit Airlines, Coinbase, Roblox and Wynn Resorts. Coming tomorrow: US Consumer Price Index for July; Earnings from Disney, Fox Corporation, Wendy’s and Bumble.