Newly created Vue app with TS doesn't recognize .vue files

[Laurelin]

Vue - Official extension or vue-tsc version

1.8.27

VSCode version

1.93.1

Vue version

^3.4.29

TypeScript version

~5.4.0

System Info

System:
    OS: macOS 14.7
    CPU: (8) arm64 Apple M1 Pro
    Memory: 146.66 MB / 16.00 GB
    Shell: 3.2.57 - /bin/bash
  Binaries:
    Node: 21.6.1 - /opt/homebrew/bin/node
    npm: 10.2.4 - /opt/homebrew/bin/npm
  Browsers:
    Chrome: 129.0.6668.59
    Safari: 18.0

package.json dependencies

No response

Steps to reproduce

run npm create vue@latest make sure to choose Typescript

go to Main.ts, import App from './App.vue'; has a red squiggle under './App.vue' error is 'Cannot find module './App.vue' or its corresponding type declarations.ts(2307)'

What is expected?

.vue files are recognized by TS

What is actually happening?

.vue files are not recognized by TS

Link to minimal reproduction

No response

Any additional comments?

There's a recent closed issue on this

https://github.com/vuejs/language-tools/issues/4118

[Laurelin]

The relevant tsconfig files:

tsconfig.json

{
  "files": [],

  "references": [
    {
      "path": "./tsconfig.node.json"
    },
    {
      "path": "./tsconfig.app.json"
    },
    {
      "path": "./tsconfig.vitest.json"
    }
  ]
}

and tsconfig.app.json

{
  "extends": "@vue/tsconfig/tsconfig.dom.json",
  "include": ["env.d.ts", "src/**/*", "src/**/*.vue"],
  "exclude": ["src/**/__tests__/*"],
  "compilerOptions": {
    "composite": true,
    "tsBuildInfoFile": "./node_modules/.tmp/tsconfig.app.tsbuildinfo",

    "baseUrl": ".",
    "paths": {
      "@/*": ["./src/*"]
    }
  }
}

[KazariEX]

The latest version of extension is 2.1.6