Why do inverted yield curve indicate recession?
It's very simple. All business need loans to grow their businesses. The loans that they take are "short-term" loans typically to build factories, buildings, buy inputs, manufacture finished goods, marketing and several other capital expenditures and expenses. These expenses are expected to provide revenues in the future, which typically arrive in longer duration. So a typical, business takes on short-term risk (loan) for long-term (rewards).
If the yield curve is upward sloping, then the long-term rewards are higher than the short-term borrowing costs. So, it makes sense to grow business and deploy capital. However, if the short-term borrowing costs are high and long-term returns are low, then a lot of projects do not make economic sense and hence the business put a break on growth and capital spend. This in turn leads to hiring freezes. If short term rates remain higher for long period, then companies expenses rise, and they may also end up laying off excess employees.