The revision still indicates that the world's biggest economy is growing healthily.
Earlier this month, the US central bank raised interest rates for the first time in nine years amid optimism over the country's economic strength.
Strong consumer spending offset high stocks of goods.
Inventories reached record levels in the US in the first half of the year and high stocks mean manufacturers replace these unsold items at a slower rate.
Consumer spending, by far the largest element of the US economy, grew by 3% in the third quarter.
The latest growth estimate from the Commerce Department is the third for the July-to-September period.
The pace is almost half the 3.9% annualised rate recorded in the second quarter of the year, but that rate was boosted by businesses catching up ground lost during the cold winter weather at the start of 2015.
Last week, the Federal Reserve raised its key interest rate by 25 basis points to between 0.25% and 0.5%.
The Fed accompanied its rate rise with a forecast that the US economy would grow by 2.4% next year.
The US economy grew at an annual pace of 2.0% in the third quarter, according to official figures, slightly slower than the previous estimate of 2.1%.