Half a million homes and businesses across the US are without power after Hurricane Sally unleashed “historic and catastrophic flooding” in multiple southern states.

A state of emergency was declared in Alabama, Florida and Mississippi, with damage from Sally expected to reach up to $US3 billion ($A4.1 billion), said Chuck Watson of Enki Research.

Emergency crews have so far rescued a family of four found clinging onto a tree, and more than 40 others who were trapped in their home amid the storm and flooding.

Sally produced wind gusts as high as 168 kilometres per hour, battering metropolitan areas home to almost one million people.

The incredibly slow-paced hurricane – moving at less than walking pace – has since weakened to a Category 1 storm but the threat from heavy rain and flooding continues.

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The National Hurricane Center warned that “historic and catastrophic flooding” was unfolding west of Tallahassee in Florida to Mobile Bay in Alabama.

It also said “portions of the coastline from Alabama to the western Florida Panhandle, including Pensacola Bay” were experiencing a “life-threatening” storm surge.

Escambia County Sheriff David Morgan said crews are seeking to evacuate entire communities over the next several days, making for a “tremendous operation”.

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Sally’s slow pace is only going to “exacerbate the flooding”, National Hurricane Center deputy director Ed Rappaport told the Associated Press.

Some residents said Sally’s speed – or lack thereof – reminded them of Hurricane Danny in 1997, which also moved very slowly while bringing extreme rain that triggered floods and mudslides.

With 500,000 homes and businesses experiencing power outages, National Weather Service forecaster David Eversole in Alabama said Sally’s slow approach was a serious concern.

“Sally’s moving so slowly, so it just keeps pounding and pounding and pounding the area with tropical rain and just powerful winds,” Mr Eversole said.

“It’s just a nightmare.”

Meteorologist and storm chaser Reed Timmer has been sharing videos from the eyewall of the hurricane which he says is causing “historic flooding”.

Officials across the south had called on residents of low-lying areas to shelter away from the winds and rain.

Ports, schools and businesses were closed along the coast as Sally churned.

As the storm track shifted east, ports along the Mississippi River were reopened to travel on Wednesday.

But they were closed to vessel traffic from Biloxi, Mississippi, to Pascagoula, Florida.

Energy companies shut more than a quarter of US Gulf of Mexico offshore oil and gas production and some refiners halted or slowed operations.

Sally is the eighth named storm to make landfall this year, with Jim Foerster, chief meteorologist at DTN, saying “we’ve only got one name left”.

“That’s going to happen here soon, Wilfred, and then we’ll be into the Greek alphabet.”

-with AAP/agencies