Doesn't seem like a competitive UGPA for a prospective theory student to any of the top 20 programs (i.e. the only programs worth attending for theorists). I'd say take another year and make sure you get 3.9+ GPA within that timespan. Don't take grad functional analysis unless you're sure you can get an A. LORs are relatively unimportant for pure theory students, because there's generally no RA work available for undergrads. Alternatively you can spend the next year to switch to empirical RA work and focus on econ elective courses, which would be a much easier path, but it depends on your interests.