2013 Earnings Outlook Now in Congress' Hands

2013 Earnings Outlook Now in Congress' Hands
Source: Paramount Pictures

The S&P 500 is up 2.3 percent this week because there is a honeymoon between Wall Street and Congress over the "fiscal cliff."

This could end fast.

Most people are fed up hearing about the fiscal cliff. It's like Greece. After a while, too many iterations produce eye-glaze.

But there is a lot at stake. It's the difference between "eh" GDP growth and "improving" GDP growth in 2013.

(Read more: Two Weeks of Goodwill, Then Markets Get Jittery)

The difference between flat to negative earnings growth and mid- to high- single-digit earnings growth.

I've been struggling to figure out a new way to explain this to people. Citi had the best comment today, which said: "Congress to Decide 2013 Profit Outlook."

It's a good point. "[T]he course of fiscal policy in 2013 could prove decisive for the U.S. growth outlook" the piece notes.

(Read more: IRS Holds the Key to 'Fiscal Cliff' Rally)

The United States will likely experience another year of roughly 2 percent GDP growth. Even mild fiscal tightening could cost us more than a percentage point of that GDP. That means we are down to one percent GDP growth.

And earnings growth? Roughly 5 percent is Citi's estimate, with even a mild fiscal tightening.

And if we go over the fiscal cliff? Earnings could decline by 10 percent. GDP could drop to NEGATIVE 1.2 percent.

See why we pay so much attention?

(Read more: Obama Hangs Tough on Taxing the Wealthy)

—By CNBC's Bob Pisani

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