chalice deploy/local fails for unknown reason, does not return error

Related to #660 but different.
System: Ubuntu 16.04 x86-64
Python 2.7.12
virtualenv, pip freeze:
> botocore==1.8.22
> chalice==1.1.0
> click==6.6
> docutils==0.14
> jmespath==0.9.3
> python-dateutil==2.6.1
> six==1.11.0
> typing==3.5.3.0

example app: [app.py.txt](https://github.com/aws/chalice/files/1608086/app.py.txt)

**Error:** import os, assign variable to os.environ['STAGE'], run chalice deploy OR local. Simply returns 'STAGE'. Ex:

> $ chalice local
> 'STAGE'

**Steps to recreate:**
chalice new-project test
copy app.py (attached)
add 'STAGE' as environment variable in .chalice/config.js
run chalice local

Start with the attached app.py example and the .chalice/config.js environment-variable configuration, then reproduce the behavior with chalice local and chalice deploy using the stated Python and Chalice versions. Trace where the command handles the resulting 'STAGE' output and establish a clear, actionable error outcome for the reported failure.

Written by the indexing model from the issue text.