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Fannie Mae report says circumstances have affected economy's bounce back

Economy has suffered a bit of a setback recently, according to Fannie Mae.

Economy has suffered a bit of a setback recently, according to Fannie Mae.

Just when the economy looked as though it might be moving in the right direction, a new report indicates wide scale recovery is not yet within reach.

According to Fannie Mae's Economic Outlook, rising oil prices, political unrest in the Middle East and the earthquake in Japan affecting automobile supply has slowed the rate of recovery.

Home sales have been impacted as well, as fewer people appear to be moving.

"Home price expectations have deteriorated during the past several months, which could cause some potential homebuyers to remain on the sidelines," said Doug Duncan, Fannie Mae's chief economist. "Further sharp cutbacks in housing demand would pose a risk to the fragile housing recovery."

On the positive side, Fannie Mae projects that the slowdown will be short-lived, with further economic growth expected to come in the second half of the year.

Earlier this month, the Labor Department reported employers added more than 230,000 jobs to payrolls. Employment being a lagging indicator may help explain why the recovery hasn't been more apparent.