US economic growth in the third quarter came in at 4.3 percent on an annualised basis, easily topping expectations, according to US Commerce Department data released on Tuesday.

The report, which also showed an acceleration in inflation, provides reassurance about the world's largest economy after other recent data showing a weakening labour market.

It comes as worries have moderated over US President Donald Trump's tariffs and as large tech companies advance massive investments to build new artificial intelligence infrastructure.

The gross domestic product report – delayed for nearly two months due to a government shutdown – reflects increases in consumer spending, exports and government spending, partially offset by a decrease in investment, according to the department's Bureau of Economic Analysis.

The reading, an initial estimate expected to be updated in early 2026, marks the highest GDP in two years. Analysts had expected 3.2 percent growth, according to consensus estimates from MarketWatch and Trading Economics.

The report also showed the price index for domestic purchases rose 3.4 percent, a much higher inflation reading compared with 2.0 percent in the second quarter.

The data suggest faster growth and higher inflation than markets had expected – potentially changing the calculus for upcoming US monetary policy decisions.

Other recent data has shown a weakening job market that has prompted the US Federal Reserve to cut interest rates at the last three meetings, viewing the employment picture as its prime concern even as inflation has lingered above two percent.

US stock futures fell following the GDP data, likely reflecting lower odds that the Fed will again cut next month.

"I think the implication is that with the GDP numbers being as strong as they are, that gives the Fed additional reason to be on hold at the January (Fed) meeting," said CFRA Research's Sam Stovall.

While inflation remains well above the Fed's two percent target, Fed Chair Jerome Powell and other policymakers have described the weakening employment market as the greater concern at the moment.

The Fed's median 2026 GDP forecast is 2.3 percent, up from 1.7 percent projected in 2025, according to a summary of the central bank's outlook. (AFP)