While some of his racism was kind of retarded, most of it simply reflects the attitudes people have always had. He saw blacks as unproductive, prone to criminality, and prone to joining insane cults (see welfare culture, Detroit and other majority black cities, and the NOI which teaches that black people are from space and created whites in labs before forgetting how to do science).
The aspects of his racism which I find retarded include his portrayals of the various nationalities of white people. He was obviously of the opinion that Anglo Saxons were the highest breed of whites, yet every English descended white person who isn't already an insane cultist or evil magician goes insane by the end of story, or is struggling to deal with the implications of what he's learned. Whereas Irish and Italian people, while generally portrayed as superstitious, aren't likely to join cults, use evil magic, and will actively use violence against evil forces, or at least against cultists. Germans also seem to not go insane at the drop of a hat. And for some reason in HPL, there's a genetic defect in all English people that makes them prone to fainting spells upon smelling strange scents, seeing weird angles, hearing weird words, seeing monsters, or seeing an unpainted house.
HPL's characters are very often overblown portraits of whatever ethnicity they belong to, although I doubt he meant it that way.