Is sound quality lost when recording through USB interface?

Sound quality is reduced when passed through anything.

This is unavoidable.

Microphones are analog, USB is digital. In between there has to be an a/d (analog to digital) converter. Normally a microphone connects to computer hardware by a round analog connector that plugs into a jack in the sound card or motherboard. USB microphones, on the other hand, have built-in a/d converters inside a “capsule.” The engineering trade-off is low-volume output versus output distortion, either of which lowers signal to noise ratio, i.e.,, sound quality.

More info about USB microphones at this site:

These microphones are designed to be able to cope with reasonably high level audio without distorting, but because there is no adjustable “gain” in the pre-amp section of the microphone, if you are talking quietly then the recording level will be low.

Get really close to the microphone, but avoid blowing on it (a “pop shield” can help to avoid wind-blast from your breath) and speak at a reasonable volume level. After recording, use the Amplify effect to boost the volume level.

Sorry, @_Whitetigress, somehow missed the guitar part. What kind of USB device are you using? If the guitar amp has built-in USB then you should be able to set the level & adjust pots, etc, plus it’s probably got a decent a/d stage to generate the serial data.