Processes hang indefinitely with no timeout or progress indication

Bug: Claude Code processes hang indefinitely with no timeout or progress indication

Environment

| Component | Version |
|-----------|---------|
| Claude Code CLI | 2.1.81 |
| VS Code Extension | anthropic.claude-code@2.1.81 |
| VS Code | 1.111.0 (arm64) |
| macOS | 26.3.1 (Build 25D771280a) |
| Machine | MacBook Pro, Apple M2 Pro, 16 GB RAM |

Description

Claude Code processes in VS Code frequently hang and never return. The status indicator shows various processing states ("thinking", intermediate status messages) but the operation never completes. There is no timeout, no error, and no recovery — the process just stalls indefinitely. The only option is to manually cancel or restart.

Expected behavior

1. Timeout with recovery. If a process is going to take longer than a reasonable threshold (e.g., 30-60 seconds), it should either time out gracefully and report what happened, or surface a clear progress indicator.
2. Progress indication. When an operation is in-flight, the user should have some sense of whether it will take 30 seconds, 4 minutes, or 12 minutes. An indefinite spinner with no ETA is not acceptable for a tool people rely on for real work.
3. Come up for air. Long-running operations should periodically report status — even a simple "still working on X, Y% complete" or "waiting on API response" — so the user knows it hasn't silently died.

Steps to reproduce

This is intermittent but frequent. It happens during normal usage — asking Claude to perform tasks in the VS Code extension panel. The process enters a "thinking" or processing state and never exits. No error is thrown. No output is returned.

Impact

This is a significant productivity blocker. When a process hangs, the user has no way to know if it will resolve in 10 seconds or never. The only recourse is to kill and retry, losing whatever work was in progress.