It's not 100% clear to me what it is exactly but I'm assume it's indexing/analyzing the current file or something. But anywhere there are a few issues I see with it:

1 - It appears to pop up briefly for every single file that is opened, it appears on the very right of the status bar so it shifts all the items to the left and then back again.

Some possible solutions:

• Do not show it straight away but instead only when it's taking longer than expected to analyze (say after 1 or 2 seconds).
• Move it to the very left.

2 - It's red, this is an accessibility issue as contrast is not guaranteed and even on the default theme it's very hard to read.

Some possible solutions:

• Make it the default color
• Request the vscode team to support a special status bar item state that indicates some error or requires attention state that makes the color themable (this is not my area so I'm not sure how feasible this is).

Related: microsoft/vscode#76909