First your assumption of 20ma per LED is not a requirement. The LEDs might be rated at 20ma (max) but that does not say they must be run with that amount of current. Using a lower current just results in a reduced brightness. Also as others have pointed out not all LEDs are on at the same time. (In this case being the knight rider arrangement the sequence starts at the center then fans out and back in pairs.)
Secondly, your calculation of 2.9V on each LED is only good for the LEDs that do not have the extra series diodes, the other LEDs are turned on in pairs through a diode so the available voltage on those LEDs is further reduced by about 0.7V.
Further, the current in each paired LED will actually be even less then the center LED as the current divides between them. Also note that running two LEDs in parallel does not guarantee they share equal currents, but to keep things simple it may not be so important.
If you're wondering about the need for the series diodes, these are needed since the 4017 outputs are not hi-z capable (they are always a high or a low), so directly shorting two outputs would cause problems. The diodes over come this problem by preventing current from the single high output from being shorted by the paired low output pin.