Hurricane Irene has been upgraded to a category 3 storm as it heads for the Bahamas.
US-based National Hurricane Center issued an advisory at 8am EDT, upgrading the tropical storm and warning winds have now reached 115mph in parts.
Total losses from Irene could reach $3.1bn across the Caribbean and along the U.S. coastline, according to estimates from US risk modelling firm Kinetic Analysis.
Hurricane Irene is expected to produce tropical storm conditions in the Bahamas today, intensifying to hurricane conditions by nightfall.
Based on current trajectories, Irene is forecast to hit North Carolina coastline on 27 August and make landfall near Rhode Island on 28 August.
Forecasts for hurricanes are notoriously difficult to predict. Scott Stransky, scientist at AIR Worldwide said: "There is considerable uncertainty in the forecast path for Irene later this week. Current forecasts place the storm on a track that could bypass Florida and make landfall in North Carolina on Saturday. Some forecast tracks show Irene impacting the Northeast coast after that, while others keep Irene off the coast entirely, and out over open water."
The last hurricane to make landfall in the US was Ike, a category 2 storm that had maximum winds of 95 mph and struck Texas and Louisiana in 2008.
NHC advised Irene may cause “devastating damage”, while an “extremely dangerous” storm surge is expected to raise water levels by as much as 7 to 11 feet above normal tide levels in parts of the island chain.