[BUG] Auto-compact option missing after recent update — context grows large and responses become very slow

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

After updating Claude Code to the latest version, the auto-compact option is no longer available.
Without auto-compact, the context window keeps growing with each interaction. When a request is
sent with a large context, the response becomes extremely slow — noticeably slower than usual.
The only workaround is to manually run /compact when the slowdown is noticed, after which
performance returns to normal.

What Should Happen?

The auto-compact feature should be present and functional, automatically compacting the context
when it approaches a certain threshold. This would prevent the context window from growing
unbounded and keep response times consistently fast without requiring manual intervention.

Error Messages/Logs

No explicit error messages. Symptom is severely degraded response speed when context window is large.

Steps to Reproduce

1. Update Claude Code to the latest version using npm update -g @anthropic-ai/claude-code
2. Start a Claude Code session in any project directory
3. Have a multi-turn conversation or work through several tasks without running /compact
4. Observe that there is no auto-compact option in settings or no automatic compaction occurring
5. Continue the session until the context window grows significantly large
6. Send any prompt and observe that the response is extremely slow
7. Run /compact manually
8. Send the same prompt again — response speed returns to normal

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.79

Claude Code Version

2.1.81

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

The manual /compact workaround fully resolves the slowness, confirming the issue is specifically
tied to unbounded context growth in the absence of auto-compact. This was not an issue before
the recent update.