The US economy grew at its fastest pace in almost two years in the third quarter, the government said yesterday as it revised higher its estimates of business and consumer spending.

The broad revisions hinted at some underlying strength which could help the economy better absorb a blow from an anticipated cutback in inventory accumulation this quarter. The Federal Reserve on Wednesday gave the economy a vote of confidence, announcing it would reduce its $85 billion monthly bond-purchases by $10 billion starting in January.

Gross domestic product (GDP) grew at a 4.1 per cent annual rate instead of the 3.6 per cent pace reported earlier this month, the commerce department said in its third estimate. Economists had expected third-quarter GDP growth would be unrevised at a 3.6 per cent rate.