Yes, unfortunately, it is. When I was growing up, it was the most proper term one could use to refer to a person of African descent. As a kid, I was taught to say it carefully with a good long eee sound so no one would think I was speaking rudely to or about someone.
Now, it has been lumped in with the --gger word (which originally came from a mispronunciation of the --gro word) and both are considered bad. *sigh*
You're safely inoffensive if you say "African American." It takes a little longer, but it's worth it not to offend someone unintentionally.