The weather agency forecast a danger of "life-threatening" flooding during the next 36 hours along the coast from Georgia to North Carolina.
There has been flooding along with warnings that storm surges could kill people and damage property. Despite the downgrade, ABC News meteorologist Daniel Manzo cautions, "Record-breaking flooding will continue in eastern North Carolina this morning".
Hurricane Matthew, carrying winds of 195 kph, lashed central Florida yesterday, hugging the Atlantic coast as it moved north and threatened more destruction after killing more than 500 people and leaving thousands homeless in Haiti. A count by Reuters, based on information from local civil protection officials, puts the death toll in Haiti well over 800. Four deaths were reported in the Dominican Republic and one in St. Vincent and the Grenadines.
Todd said he was staying with friends at a third-story condo, which had lost electricity.
At least three towns in the hills and coast of Haiti's fertile western tip reported dozens of people killed, including the farming village of Chantal where the mayor said 86 people died, mostly when trees crushed houses. As the storm moves north, so do cancellations with Atlanta, Charleston and Savannah taking the largest hits.
The Capital Weather Gang reports that the storm may begin to taper off Saturday evening, but the New York Times reports that North Carolina officials are anxious that unprepared residents may still be at risk there, as many did not believe the storm would reach them, which it now seems certain to at least partially do.
Matthew's center crossed near McClellanville, S.C., between Charleston and Myrtle Beach before 11 a.m. Georgia Power said at least 275,000 were without power in the state.
"There is nothing safe about what's getting ready to happen", Haley said Friday morning. "But I'm not going to lie: There's a little bit of nervous tension right now".
Homeowner Joe Lovece surveys the damage to the kitchen at the back of his oceanfront home after the eye of Hurricane Matthew passed Ormond Beach, Florida, October 7, 2016.
Water from the storm rushed through streets, making roadways look more like rivers in parts of Jacksonville, Merritt Island, Fleming Island and other Florida communities.
The tropical storm has the potential to cause a nine-foot water surge along the coast - combined with 15 inches of rainfall, the south east is expected to be hit with deadly flooding.