In its 0600 GMT advisory, the center said Florence was over the Atlantic Ocean about 55km east of Wilmington, North Carolina and moving northwest at 10km per hour.
FEMA has warned that while downgraded, the storm will still generate life threatening storm surge and rainfall in North and SC.
Another Wilmington resident said she does not want to leave because she is afraid to see what she would be coming back to. Despite its unpredictable path, it was forecast to make landfall near Cape Fear, North Carolina, at midday on Friday.
Forecasters said conditions would only get more lethal when the storm smashed ashore early on Friday near the North Carolina-South Carolina line and crawled slowly inland.
Duke has said it could take several weeks to fully restore power in areas that are inaccessible due to flooding.
The mayor of Carolina Beach, North Carolina, said authorities have stopped allowing traffic to the island via the only bridge between the island and the mainland.More news: These Photos of Hurricane Florence From Space Are Mind Boggling
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The National Hurricane Center says that despite the gradual lowering in wind strength, the storm remains extremely unsafe because of the high volume of rainfall and storm surges predicted. However, as the storm continues to track south, rainfall totals could increase.
"The people of North Carolina need to understand that Matthew was a Category 1 hurricane when it finally made landfall in the Carolinas, and it caused hundreds of millions of dollars in damage", US Sen.
Officials said people refusing to evacuate could end up alone, drenched and in the dark, as rescue crews won't go out to help in winds above 50 miles per hour. Storm surge of 13 feet on top of a high tide at 7 feet could overwhelm the town. Heavy rains were forecast to extend into the Appalachian mountains, affecting parts of Alabama, Tennessee, Kentucky and West Virginia.
Click on the videos below for a live look at the storm's impact in North and SC.
Wilmington resident Julie Terrell said she was concerned after walking to breakfast past a row of shops fortified with boards, sandbags and hurricane shutters.
But North Carolina Governor Roy Cooper warned: "Don't relax, don't get complacent". Instead, they drove 150 miles (240 km) inland to his mother's house in Durham.
Will Epperson, a 36-year-old golf course assistant superintendent, said he and his wife had planned to ride out the storm at their home in Hampstead, North Carolina, but then reconsidered.
"On a scale of one to 10, I'm probably a seven in terms of worry, she said".