It's gravy, per a direct translation. We call it gravy at home too. We have other sauces that are literally translated as sauce, but generally they aren't the kind you'd put on pasta.
Generally speaking, this is more a topic for Americans to argue about than it is for Italians and Italian-Americans to actually care. In Italian, we know what each other are talking about whether the word sugo or salsa is used, but we tend to use it properly depending on what type of gravy or sauce is being discussed.
The stuff you're used to eating out of a jar or making at home, especially the ever popular meat sauces, would be a type of sugo in Italian, or gravy. There are sauces for pasta too, which would be salse in Italian (plural there), like salsa finta (which is usually a quick sauce made from ripe tomato pureed or diced and quickly sauteed with basic seasonings).
Anyhow, I'm Italian-American, so maybe not the full qualification of what you were looking for here. But I'm first generation and a native/prior-to-English Italian speaker. We've discussed this at home, and it always comes down to being a regional American absurdity rather than an actual point of discussion.
But we have better things to care about, like what we're having for dinner
