Some parts of the Gulf Coast have already been inundated with more than 18 inches (46 cm) of rain in the last 24 hours, with more precipitation expected even as the storm's winds slow, the National Hurricane Center said.
Pensacola, Florida, a coastal resort community of 50,000, suffered up to five feet of flooding and travel was cut by damaged roads and bridges. More than 500,000 homes and businesses across the area were without power as the storm knocked over stately oak trees and tore power lines from poles.
The storm was moving at a slow 8km-per-hour, pace toward the Alabama-Florida border.
"The rain is what stands out with this one. It's unreal," said Cavin Hollyhand, 50, who left his home on a barrier island and took shelter in Mobile, Alabama, where he viewed the damage on Wednesday.
Upon landfall at Gulf Shores, Alabama, Sally's winds were clocked at 165kph. Along the coast, piers were ripped away by the storm surge and winds.
Damage from Sally is expected to reach $2 billion to $3 billion, said Chuck Watson of Enki Research, which tracks tropical storms and models the cost of their damage. That estimate could rise if the heaviest rainfall happens over land, Watson said.
As the storm moved east and inland, ports on the western Gulf Coast were reopened to travel and energy companies were beginning to return crews to offshore oil platforms.
Sally shut more than a quarter of US Gulf of Mexico offshore oil and gas production. Two coastal oil refiners halted or slowed operations, adding to existing outages from last month's Hurricane Laura and pandemic-related demand losses.