A nonwoven composite that exhibits latent elastic properties is provided. More specifically, latent elasticity may be imparted by blending a thermoplastic elastomer with a polyolefin that is capable of forming semi-crystalline domains among the amorphous elastomeric chains, and then forming a film from the blend. The film is then stretched in one or more directions to orient the amorphous elastomer chains. Without intending to be limited by theory, the present inventors believe that the oriented state of the amorphous chains may be held in place by the relatively stiff semi-crystalline olefin domains. Subsequently, the stretched film may be activated (e.g., heated) to shrink the film and provide it with "latent" stretchability. For instance, the stretched film may be heated at or above the softening temperature of the polyolefin to soften the crystalline domains and allow the amorphous chains to return to their unoriented state. As a result of the present invention, the elastic film may be extended and recover from its unoriented state.