New York city has been spared the worst of Tropical Storm Irene, but it still left a trail of destruction across the US east coast and left 14 people dead.

A short time ago US President Barack Obama said that while Irene is weakening, it is still a threat to those communities in its path.

Speaking from the Rose Garden, Obama said the public is still at risk of flooding and power outages.

He urged people to continue to listen to the guidance of their state and local officials in the coming days.

Obama praised those officials, as well as first responders, for their work preparing and responding to the storm. He said it has been an example of how good government can benefit the public.

Irene was downgraded from a hurricane to a tropical storm as it made its way up the East Coast. Most areas, including New York City, appear to have escaped with less damage than originally expected.

Localised flooding occurred in the south and east of Manhattan, with more serious incidents in Brooklyn, where the famed Coney Island amusement park took a battering and outlying beaches were swamped.

There was heavy flooding along the low-lying south shore of Long Island where high tides, rain and ocean surge drove waves right up against expensive beach houses. Floods were also reported far inland after torrential rain.

At least 14 deaths were blamed on the storm, which first slammed into North Carolina on Saturday with140 kph winds, before turning north up the coast.

The youngest victim, an 11-year-old boy, died when a tree crashed through his apartment building in Newport News, Virginia.

Strong winds were expected in New York until nightfall Sunday, but the storm - the first hurricane to hit the Big Apple for a generation - was weakening as it continued up towards Boston.

"The good news is the worst is over and we will soon return to restore and return mode,'' New York Mayor Michael Bloomberg said.

He announced that 370,000 people ordered to evacuate could now go back home. More than a million evacuees in New Jersey were also starting to return.

The New York Stock Exchange said it was set to reopen as normal Monday morning.

City officials warned that commuting into New York could be a nightmare this week with no firm indication of when public transport would be back on track following an unprecedented shut-down just ahead of the hurricane.

"You're going to have a tough commute in the morning,'' mass transit chairman Jay Walder said.

Walder said buses could start running soon, but subway trains needed extensive testing of lines and equipment.

Air travel chaos sparked by the closing Saturday of John F. Kennedy International Airport, LaGuardia and Newark also looked likely to drag on. Already more than 10,000 flights were cancelled across the eastern United States.

Christopher Ward, executive director of the area's Port Authority, said Sunday there could be "potential beginnings of service late tomorrow afternoon at best'' and "hopefully'' almost normal service on Tuesday.

Irene also left swaths of territory without power.

In New Jersey alone, 650,000 people had lost power supplies, the governor said, while in New York City the number reached 62,000 people, Bloomberg said.

The worst outages were in the greater Washington area where nearly two million people lost electricity.

Virginia's Governor Bob McDonnell told MSNBC his state had seen the second biggest power outage in its history. "It's going to be days, perhaps a week, before all the power's restored. We just ask people to be patient.''

Some 65 million people live in the urban corridor from Washington north to Boston, and experts have said the damage could run into the tens of billions of dollars.

In Atlantic City, a gambling resort on the New Jersey shore, locals started to put their lives back together, while counting the cost.

Riaz Rajput was busy removing plywood storm screens from the windows of his shop. It wasn't damaged, but his wallet still took a hit as a result of the high season shutdown.

"We were expecting to make good money, but you cannot fight with Mother Nature,'' he said.

Hurricanes are rare in the northeastern United States - the last major hurricane to hit New York was Gloria in 1985.

Meanwhile, the National Hurricane Center reported that a new tropical storm, Jose, had formed and was approaching Bermuda.

- AFP