• VSCode Version: 1.49.2
• OS Version: MacOS 10.15.5

Steps to Reproduce:

1. Delete an already existing node_modules folder from any project
2. Use yarn install to reinstall the node modules
3. The node_modules folder should still be missing from the vs code file explorer; however, it is still created and can be seen by other means such as Finder

Does this issue occur when all extensions are disabled?: Yes