[BUG] Persistent 529 (overloaded) errors are silently retried with no output shown to the user

Preflight Checklist

• [ ] 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?

Persistent 529 (overloaded) errors are silently retried with no output shown to the user .

The root cause in this case was a missing ANTHROPIC_API_KEY — the silent retry masked a configuration error as a transient load error, making it impossible to diagnose without manually asking Claude what went wrong .

What Should Happen?

After 2–3 failed retries, Claude Code should surface the exact error and stop, rather than continuing to retry indefinitely.

Error Messages/Logs

Steps to Reproduce

1. Open Claude Code in a project that uses the Anthropic API (e.g. a Convex

action calling Claude directly via convex/ai.ts)

1. Do NOT configure ANTHROPIC_API_KEY in the relevant environment

(e.g. Convex dashboard → Settings → Environment Variables)

1. Trigger a task that calls the AI feature (e.g. "Draft with AI" on a quote)

1. Observe: Claude Code receives repeated 529 overloaded errors from the API

1. Observe: No error is shown in the terminal or UI — the screen goes silent

while retries continue in the background

1. The session eventually stalls or produces no output; the user has no way

to know whether the model is working, waiting, or failing

Expected: After 2–3 failed retries, Claude Code surfaces the exact error
message and stops, prompting the user to check configuration.

Actual: Claude Code silently retries indefinitely with no output, masking
the root cause (missing API key) as a transient load issue.

Version: Claude Code 2.1.97

Claude Model

None

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.97

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

Warp

Additional Information

_No response_